This year was meant to be the beginning of a slow but gradual turnaround for Algeria’s key oil and gas sector. No more. Global oil demand is slumping as a result of the Covid-19 pandemic, while (already plentiful) supply is being simultaneously ramped up. The result has been a collapse in oil prices to below $30/B.
Less cash from oil and gas sales means less cash to spend. This is truer this time around than the 2014 oil price crash when Algeria had a record $195bn in foreign reserves saved for a rainy day (MEES, 7 February). Algeria has been rapidly drawing this down as if recent years were as bad as things could get – by the end of 2019 reserves were just $62bn, less than a third of the 2014 peak. Many in Algiers seem to have convinced themselves that oil prices in 2015 (then 2016, then 2017…) were unusually low and would revert to ‘normal’. But far from being ‘rainy days’ this period now looks like the calm before the storm. (CONTINUED - 1246 WORDS)