For oil producers in the region like T&T, oil prices have recovered somewhat and stabilised at around the US$40 per barrel (WTI), after reaching historic lows.
This compares to an average WTI price of US$57 per barrel in 2019, the Inter-American Development Bank (IDB) noted in its new report on the ongoing impact of the crisis for countries in the region
Future prices set for the next six to 12 months have also stabilised at around US$40 per barrel.
“That said, there could be substantial volatility because the future evolution of the economies of major oil consuming countries is highly uncertain, and oil demand is closely linked to economic conditions in those countries,” the report said.
In addition, even with the regained stability of oil prices , the drop compared to last year will certainly affect the value of production for T&T, Suriname, and the new oil exporter, Guyana, it added.
Natural gas prices have continued declining recently, with the Henry Hub price dropping below a new low of US$1.50 MMBtu in late June.
Future prices indicate an expected recovery to well over US$2 MMBtu early next year.
However, the continued decline of natural gas prices is of concern for T&T, given that its natural gas production is tenfold larger than its oil production, the report said.
It said while coronavirus curves had flattened and several airports re-opened, the region still faces a treacherous transition to a post-crisis scenario.
The report said as countries begin to open their domestic economies, they are still battered by external shocks.
This is particularly the case for the tourism-dependent economies that experienced a virtual shutdown of the sector during the second quarter of the year, the report said.
It added that natural-resource-based economies are also suffering from the lingering effects of the decline in commodity prices and related external demand.
Tourism was adversely affected during the first quarter of 2020 as the crisis began to unfold, and the sector was effectively shut down during the second quarter as complete travel prohibitions came into place.
The report said expectations for the third quarter remain uncertain, but prospects for a rapid return to pre-crisis levels of demand remain grim.
The report reviews the ongoing impact of the crisis for countries in the region, and provides recommendations for policymakers as they position themselves for a post-COVID-19 recovery.
The report, Caribbean Quarterly Bulletin: The Pandemic Saga Continues, also includes detailed assessments for the Bahamas, Barbados, Guyana, Jamaica, Suriname, Trinidad and Tobago, and the countries of the Organisation of Eastern Caribbean States (OECS).