Oil Troubles

Volatile global oil prices could force the government into a funding squeeze in months, as it tries to pay a growing import bill while refusing to raise local prices. Volatile global oil prices could force the government into a funding squeeze in months, as it tries to pay a growing import bill while refusing to raise local prices.

Prices of global crude reached new record highs on Thursday at US$ 57.60 a barrel, past Wednesday’s high of US$ 56.46 and above last October’s record levels of US$ 55.67 a barrel.

This despite the Organization for Petroleum Exporting Countries (OPEC) saying they would hike output from 27 mn barrels per day to 27.5 mn barrels per day or higher.

With prices expected to shake down in the middle of the year, the market is still expected to be volatile and receptive to even minor disruptions, fluctuating widely between US$ 43 and US$ 60 in the medium term, Analysts at HNB stock brokers say.

“The latest rise in global oil prices could lead to an additional fund requirement in approximately two months when existing stocks are over, resulting in further pressure on the government’s budget deficit,” Analyst Jayani Amarasinghe at H