The government could lose about half of the projected oil revenue for this year.
This is if prices continue to decline or stays at around $30 a barrel for the rest of this year. But does this now put pressure on the government to quickly review its budget estimates before July this year?
In the 2020 budget, the government projected to get about $1.5billion at a benchmark price of $62.6 per barrel for its oil revenue, due to the effect of the outbreak of the coronavirus on oil demand and the sudden price war between Saudi Arabia and Russia oil prices are now hitting about $30 per barrel.
OPEC and Russia have started an oil price war that could push crude into the $20s, according to Goldman Sachs.
Brent crude may dip as low as $20 a barrel, testing the levels at which some producers can operate, analysts including Damien Courvalin wrote in a report.
The move completely changes the outlook for oil and gas markets, the bank said, as it slashed its forecasts for the second and third quarters to $30 a barrel.
“We believe the OPEC and Russia oil price war unequivocally started this weekend,” the analysts said. “The prognosis for the oil market is even more dire than in November 2014, when such a price war last started, as it comes to a head with the significant collapse in oil demand due to the coronavirus.”
OPEC and its allies failed to reach an agreement to prolong output cuts last week, firing the starting gun on a price war that has already roiled prices.
Over the weekend Saudi Arabia slashed its official selling prices, while the kingdom also plans to lift output above 10 million barrels a day.