This article was taken from our Algeria Politics & Security publication.

Algeria’s overwhelming dependence on the revenues from energy sales for its finances makes its economy acutely vulnerable to the low global oil price.

Menas Associates estimates that Algeria has financial reserves that could allow it to weather the current price environment for two years, perhaps more, and the country’s low level of foreign debt also leaves open the option of international borrowing that the country has so far been reluctant to take.

But, with the economic strain beginning to tell and the firsts signs of popular unrest occurring, Algeria Politics & Security reports that the government may not be able to wait that long.

Last week, senior Algerian officials laid out there views on the outlook for global energy prices, and how it might be improved.

Speaking at the Sixth North African Petroleum Exhibition and Conference (NAPEC) conference on 9 March, Algeria’s Energy Minister, Salah Khebri, said that the recent recovery of the oil price to around the US$40 per barrel level was ‘unstable’. He said that the recovery in world oil prices is still ‘very unstable’ and prices could drop again.

Speaking at the same forum, Sadek Boucena, a former Sonatrach executive and former energy minister, said he believed that prices could range between US$50 to US$70 if there is an agreement between OPEC and non-OPEC producers to limit production.  Khebri said Algeria would continue to work to find a consensus solution within OPEC to help prices recover.

In February, Saudi Arabia, and non-OPEC producer Russia, the world’s two largest oil exporters, agreed to freeze output at January levels to prop up prices.

Khebri said that Algeria supported the Saudi Arabian and Russian pact to freeze production. He added that the country would participate in the forthcoming meeting between OPEC member countries and non-OPEC countries as soon as the date was fixed.

Khebri told the press on the sidelines of the NAPEC conference ‘Algeria supports all decisions that allow recovering stability of the oil market. Even if this is not enough, freezing [production] is a first step as it enables the world’s two biggest producers [Saudi Arabia and Russia] to sit on the same table and talk in the interests of the producing countries.’

On the question of whether Algeria would cut production if a decision was taken in this regard at the coming meeting, Khebri said that Algeria would opt for such a decision if the freeze is not enough.

He recalled that Algeria had already called for cutting supply to support prices. Khebri said: ‘We have already called for a production cut. The freeze is an important first step. If it is not sufficient, then we will then reduce production.’