The World Bank boosted its projections from April for the average oil price in 2020 and 2021 to $41 a barrel and $44, respectively, as a slow recovery in demand is matched by an easing in supply restrictions. That still leaves prices well below 2019 levels of $61. Outside of energy, a small decline in metal prices will be offset by an increase in agricultural prices this year.
The swift recovery in oil prices following April’s price rout has stalled as the resurgent coronavirus spurs governments to rethink reopening plans. While stimulus can help buffer the impact, Covid-19 presents a challenge to commodity exporters, with policy makers needing to allow their economies to adjust smoothly to a “new normal” should the pandemic persist.
“In the post-Covid world, these countries need to be more aggressive in implementing policies to reduce their reliance on oil revenues,” said Ayhan Kose, director of the World Bank Group’s Prospects Group.
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