Global oil prices yet again nosedived on Monday to its lowest since April’s historic oil price collapse.
The global benchmark Brent crude dropped to $42.04 per barrel for a fourth straight day.
According to the Organization of the Petroleum Exporting Countries, OPEC, this is partly because Saudi Arabia made the largest monthly price cuts in sale of its crude to Asia, its largest regional energy market.
In the US, the crude was down to $38.55 per barrel, the lowest since 10 July.
Economists have attributed the drop to the coronavirus pandemic which has undermined energy demand worldwide, but especially in China.
China is the world’s largest importer of crude oil, using about 10 million barrels per day.
Economists also attribute the drop to an agreement reached by OPEC in April which called for global oil production cuts.
This was after the US crude prices plunged below zero dollars per barrel – causing global oil market crash.
The OPEC deal compelled signatory countries to reduce crude production by 9.7 million barrels per day in May and June.
Thereafter, production will be slashed by 7.7 million barrels per day until the end of 2020.
The production levels will further be reduced by 5.8 million barrels per day from January 2021 until April 2022.
South Sudan is one of the oil-producing countries that signed up to the agreement.
But the country is already facing its worst economic conditions because it gets much of its hard currency from oil sales.
The current production levels of the crude oil in South Sudan have dropped from 250,000 barrels per day to around 175,000 barrels per day.
Last year, the government used to receive over $5.5 million per day or more than $165 million per month from selling crude oil.
But recently, the Central bank announced that is not able to stuff its foreign currency reserve due to scarce revenue from oil sales.
The South Sudanese Pound has depreciated further against the US dollar.
1 dollar has been trading at 400 South Sudanese Pounds in the black market, while at the Central Bank, a dollar is the equivalent of 164 pounds.
An economist at Dr. John Garang Memorial University recently warned that the conditions may worsen unless South Sudan’s oil production is increased, or the price of crude oil goes up.
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Published Wednesday, September 23, 2020
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