The price of oil has risen again. By the end of this morning's bidding, the price of Brent crude was US$36 a barrel. Earlier, due to the failed negotiations of the OPEC members with Russia and other partners on the additional production cuts, the oil prices crashed by almost a third and were US$31 a barrel.
"It can be assumed that it is the beginning of the end of the OPEC+ organization. Now the domino effect will take place. The strongest oil companies will survive in this situation. Each producer will increase oil production, including Saudi Arabia, Iraq, and other large companies," said Economist Arman Baiganov.
Experts: impact of plunging oil prices on Kazakhstan's economy
Meanwhile, experts say that a short-term drop in oil prices will not significantly affect Kazakhstan's economy. However, if the price per barrel drops to US$20 and lasts for a month or two, this will cause an economic catastrophe. The country will have to resort to the savings and reserves of the National Welfare Fund. There is a forecast of how long the reserves of the Kazakh National Fund can last in the worst-case scenario. The managing director of the Applied Economics Research Center, Olzhas Tuleuov, estimated that if the price per barrel drops to US$10-20, then the reserves of the Kazakh National Fund will last for 6-7 years. The country's banking system is prepared for the shockwaves that are currently happening in the world markets, he believes.
At the moment, the banks have enough reserves of capital to deal with the shocks. The banks are likely to withstand the pressure. But again, it's necessary to look at this in detail", emphasized Managing Director, Applied Economics Research Centre, Olzhas Tuleuov.
Economists advised the Kazakh citizens to avoid panic and not to rush to exchange the currency. They recommended waiting for the official bidding.
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