Global oil prices have fallen drastically. Oil producers are worried, but importing countries like Morocco will benefit.
By Shaquile Goff
Rabat- Oil Prices have fallen over the past five days from $68 per barrel to about $65.50 per barrel, according to data from InvestMine. After climaxing at about $81 per barrel in late September, oil prices have since dropped nearly $20 per barrel in less than two months.
OPEC, led by Saudi Arabia, previously assured that production would increase after international calls to lower the global oil price increased.
US President Donald Trump was extremely pleased with the recent oil price drop, and he immediately voiced his opinion on Twitter. Calling the oil price drop “a huge tax cut for America and the world,” he also asked the Saudis to “go lower.” Oil production in Saudi Arabia has increased to about 11 million barrels annually with more countries adjusting to American sanctions placed on Iranian oil, according to Bloomberg.
In Morocco, both citizens and the government benefit from a drop in oil prices. Moroccan citizens already went on strike this year over high gas prices. The transportation industry was left paralyzed in October after taxi and bus drivers refused to work with the expensive fuel prices, according to Moroccan news outlets.
Similarly, fruit and vegetables supplies increased in Casablanca by an estimated 33 percent in October when freight drivers also went on strike, prompting alarm in the government.
The Moroccan government’s subsidies for butane gas cost about 2-4 percent of the annual GDP in 2014, according to the Economist. Cheaper oil would benefit industries across the country, and the government will also have more free capital to invest elsewhere. Prices will also be cheaper for everyday consumer goods, as freight costs will be lower across the country.
Conversely, countries with a strong oil production industry continue to voice alarm over the price drop. Algeria, one of the biggest oil producers in Africa and an OPEC member, urged fellow OPEC countries to ignore Trump’s demand for lower oil prices earlier this year.
The country relies on oil to maintain its foreign currency reserves, and experts estimate barrel prices must remain over $75 per barrel for the Algerian government to offset its budget deficit, according to Arab Weekly.