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Saudi Arabia, China Lead Oil Market Recovery in 2021

Saudi Arabia, China Lead Oil Market Recovery in 2021

Sunday, 10 January, 2021 - 11:30
A man walks past the International Monetary Fund (IMF) logo at its headquarters in Washington, US, May 10, 2018. (Reuters)

Oil prices maintained a steady recovery, closing to USD 56 per barrel on Friday, after Saudi Arabia’s announcement on Tuesday of an additional voluntary reduction of its oil production by one million barrels per day.

The Kingdom’s move has accelerated the recovery and stability of the oil market, as the markets gained about USD 6 dollars per barrel from Tuesday to Friday, amid expectations of a continuous rise that would reach USD 60 by mid-2021.

Meanwhile, the International Monetary Fund (IMF) said that the economy of China - the second largest in the world – was expected to grow by 7.9 percent this year, compared to a growth of 1.9 percent in 2020, the worst since 1976, just before the start of its economic reform era.

Experts believe that because the supply of oil would be inferior to the demand in the markets, China would tend to withdraw from global oil stocks, which would lead to their decline.

Moreover, the IMF said China’s economy was adjusting to the “pandemic normal”, with help from technology and digitalization of services, but it cautioned that activity was expected to remain below capacity over the medium term.

“Until end-2021, some restrictions and voluntary social distancing will continue to dampen person-to-person services activity,” said the IMF report.

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