The Arab Petroleum Investments Corporation (APICORP), a multilateral development financial institution, estimates that planned and committed investments in the MENA region will exceed USD792bn over the next five years (2020–2024). As per APICORP’s MENA Energy Investment Outlook 2020-2024, the amount marks a USD173mn decline from the USD965bn in last year’s five-year outlook. The overall decline in the investment outlook - mostly in planned investments - is largely attributed to the 2020 triple crisis: the COVID-19-related health crisis, oil crisis and a looming financial crisis. Despite these difficult circumstances however, the GCC region’s committed investments increased by 2.3% compared to a 6% overall decrease in the MENA region as a whole, indicating a higher project execution rate in the GCC.

At the end of the first quarter of 2020, most countries around the world were facing the same dilemma in how to deal with the COVID-19 health crisis: choosing between maintaining business as usual and thus risking a massive loss of lives, or imposing lockdowns and restrictions to contain the virus. This dilemma called for uncoordinated trade-offs among countries. The resumption of travel and trade however will require international coordination.

With regards to the decline in oil prices, which was driven by the supply surplus and exacerbated by a historic demand contraction due to the COVID-19 pandemic, APICORP expects that it will lead to a restructuring of the oil and associated gas industry, as well as an accelerated closure of the lowest efficiency parts of the capital stock, and mergers and acquisitions (M&A). Considering the various market forces such as crude price differentials and discrepancies between actual markets versus futures markets, APICORP projects average Brent oil prices to stay in the USD30-40 range in 2020 and 2021 before reflecting a more balanced market.

The third episode of the triple crisis is a potential financial crisis, manifested by a global liquidity crunch that is taking hold as more financial assets shed their value. Although central banks and multilateral financial institutions are stepping up, concerns linger that such massive stimulus plans might create enormous unproductive debt overhangs that will slow economic growth.

Source- Press Release