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Brent is now trading above the fiscal breakeven prices of four oil producers in the Middle East after Saudi Arabia convinced its OPEC + colleagues to keep production largely unchanged.
The surprise move by OPEC + led to Brent prices rising to nearly $ 70 a barrel. This is above the average annual levels required for the largest producers in the petroleum consortium, to balance their budgets this year.
Monica Malik, chief economist at Abu Dhabi Commercial Bank, said that if oil prices remain at current levels, “we will see budget surpluses for the economies of the larger Gulf Cooperation Council countries,” “which will provide more financial space to support economic activity and recovery, “according to Bloomberg. And seen by” Al-Arabiya.net. “
For their part, analysts at Goldman Sachs and JP Morgan have raised their expectations for Brent prices following the OPEC decision, while Citigroup has said crude could reach $ 70 before the end of this month.
It is worth noting that “OPEC +” agreed last year to remove about 10% of global supplies from the market to halt the decline, while the organization has slowly withdrawn from some of these cuts, and reductions have led to a reduction of over 7 million barrels of daily production.
Nonetheless, Brent prices have averaged just over $ 59 so far this year – below average for most Gulf states.
point of equality
Kuwait, the United Arab Emirates, Saudi Arabia and Iraq are the main beneficiaries of the current high oil prices, as current prices exceed the break-even level of the budgets of the four countries, while Bahrain and Oman have reached much higher levels to break even.
Malik said that despite the rise in oil prices, “the main non-oil sectors will continue to be affected by the epidemic”. “It will also be a balancing act for oil producers to manage the tightening oil market, while not interrupting prospects for a global recovery.”
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