U.S. Oil Plunged below $11 A Barrel In Asian Trade; Economic Inequality Could Lead To Second Arab Spring; Impact Of Collapse Demand On Middle East Exporters
CHURCH: Protest erupted in several cities in Lebanon on Monday despite government restrictions on public gatherings due to the coronavirus. Look closely and you will see a wall of burning tires blocking the road there. Clashes with security forces broke out in some areas, Protesters are furious over Lebanon's financial crisis. Prices for basic goods, are soaring, even as the value of the currency continues its month's long decline. Well, the economic outlook for the entire region is bleak with the collapse in the oil market. U.S. crude prices plunge below $11 a barrel in trading today in Asia, investors aren't looking to buy, when storage capacity is running out and demand remains low. With more on how this is impacting the Middle East region, we turn to John Defterios, who joins us live from Abu Dhabi. Always good to see you John. So the focus has been on the U.S. oil sell off, but where you are in the Middle East, 10 to $20, clearly doesn't help those states like Saudi Arabia, or Iraq, the major producers, what is the danger with all of this?</s>JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, this is an entire region, Rosemary that does benefit from higher prices of oil, particularly from $80 to $100 range. Everybody benefit, but it's the exact opposite in this case, of course, as you suggested below $20 a barrel. We are feeling the pain. Those protest in Lebanon are in part due to this, because the remittances from Lebanese expats, going back into the country dramatically, they used to depend quite heavily on the gulf Arab tourists visiting. Again, down sharply. Now the International Monetary Fund, a virtual roundtable that I was chairing, put this into perspective for the Middle East oil exporters specifically like Saudi Arabia, Kuwait, UAE, Algeria. They are saying the contraction of 4.2 percent this year. They were supposed to grow 2 to 3 percent, so that's a massive swing. And a snap back to 4.7 percent in 2021, that seems ambitious. We have a chief economist in the region here and a former minister of economy from Lebanon, on the panel. He is making comparisons to the Arab Spring in 2011, and said this could be much worse. Let's take a listen.</s>NASSAR SAIDI, FOUNDER AND PRESIDENT, NASSAR SAIDI AND ASSOCIATES: This is depression economics. Unfortunately the countries of the region, don't have the automatic stabilizers, they don't have the physical tools. And what we may be heading towards is a vast increase in inequality. A vast increase in poverty, and a lot, I think a lot of social interest, and a lot of political unrest. So this could be the beginning of a second Arab Spring, or Arab firestorm as I pretty sure you call it.</s>DEFTERIOS: The new name for the firestone for Nassar Saidi, who is very respected in the region now. He is an economist, as I was noting here. Now the head of the IMF, in the region was suggesting, Rosemary, we have to prepare for round two and round three of the economic falloff, from the coronavirus. And we had this partial reopening, but the demand for airplanes, and trains, and trucks, cars, consumer spending, is just not clear, so obviously it's keeping a cap or pushing oil prices even lower at this stage.</s>CHURCH: Yes. It is incredible isn't it to witness it, right? So why do we continue to see such price fallout in U.S. crude, despite the efforts by the Trump administration to stabilize the situation.</s>DEFTERIOS: Well in fact, we do not have the final definition of that support from the Trump administration, we are even taking equity stakes of the small and mid-sized producers which is incredibly radical. President Trump is very proud of this 13 barrels a day of production, that's going to drop 2-3 million. And the reality which we just have so much oil on the market in the United States was so little demand and no storage. You talked about it in your lead, and Rosemary you could run out of surges from three to four weeks. And in fact there's what 80 super tankers around the world, carrying about 2 million barrels each, being used for storage is outrageous that we are at this stage right now. But that's why we see it and we even had exchange traded funds in the states that don't want to hold the U.S benchmark at all.</s>CHURCH: All right, John Defterios, always great to chat with you. I appreciate it. And we'll take a short break here. Still to come, New Zealand begins to ease its lockdown, with hundreds of people enjoying their newfound freedom. That is a hint as to what they're doing. Plus, a Broadway tribute, like no other.</s>CHURCH: Actress Meryl Streep and some famous friends give a birthday salute quarantine style to one of the most famous composers in theater, back in a moment.