‘Lower oil prices grease global activity’

Although the threat of an all-out trade war dampens the outlook for the global economy

PARIS: The threat of an all-out trade war has dampened the outlook for the global economy, but the recent drop in oil prices should support demand, the International Energy Agency (IEA) said on Thursday. There has been intense concern regarding slowdown in China, which has been the driver for growth in the global economy in recent times, but the IEA said in a report that demand for oil there remains robust. The IEA last month lowered its forecast for growth of global oil demand for 2018 and 2019, citing high prices, trade tensions and a less favourable economic outlook. But oil prices, which struck $86 per barrel in October, then tumbled to $58 last month, prompting the OPEC oil cartel and Russia to agree on new production cuts to stabilise prices. The IEA declined to speculate on the longer-term impact of the deal, but noted that price expectations by the market have shifted lower. Lower oil prices tend to support demand for oil and economic activity.  

Published in The Express Tribune, December 14^th, 2018.

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