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There has been a lot of discussion around what to expect after
the departure of long-ruling Abdelaziz Bouteflika. Algeria's
transition to a democratic state hasn't proved to be that easy,
with a lot of concern about the impact this could have on the
country's prospects for economic development. The army is now yet
again the major power holder, resulting in further protests with no
prospects for a peaceful transition on the horizon. As the
political crisis escalates, no action has been taken so far to
improve the country's revenues, which rely on oil. Algeria has
failed to diversify away from oil and gas, which still represent
95% of total exports and around a third of GDP. A price above USD
110 per barrel would be needed to keep the local economy balanced.
But meanwhile, Algeria's Sonatrach recently decided to cut Saharan
blend crude selling price for August, setting it at dated Brent
minus 60 cents a barrel, against a price of dated Brent plus one
cent a barrel for July. With oil prices to remain below USD 70 per
barrel, the situation doesn't seem promising for the country.
Focusing on trade flows from Algeria, Europe continues to absorb
most of the barrels exported by the North African country, as data
shown by IHS Markit Commodities at Sea.
Meanwhile, there has been a noticeable increase in volumes since
July to Japan, Korea and India.
Posted 21 August 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime, Trade & Supply Chain, S&P Global Market Intelligence
