The impact of the collapse of oil prices on the Gulf economies: Saudi Arabia, the big loser

The Arab Gulf economies are strongly affected by fluctuations in oil prices, with oil being the main source of revenue for these six countries.

Capital Economics estimates in London last week that a drop in the price of Brent crude, from $ 85 a barrel in early October to less than $ 65, has wiped out $ 130 billion of oil revenues on the Gulf basis over a annual basis equivalent to 9% of GDP. Total

According to a report by Petroleum Economist, a British oil specialist, the recent drop in oil prices is expected to "continue further", even suggesting that Brent crude would fall to $ 60 in 2019 and $ 55 here. end of 2020.

According to Capital Economics, this downward trend will mean that "the economic recovery in the Gulf will reach its peak in mid-2019 and perhaps even faster." In the long run, "current Gulf budget and current account conditions will deteriorate".

Saudi Arabia is the biggest loser as the world's largest exporter of oil and therefore the Gulf region for oil exports, in decreasing order in the United Arab Emirates, then in Kuwait, Oman, Qatar and finally Bahrain.

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Another factor related to this loss is the extent to which the Gulf states depend on their oil export budgets, although this is a major factor in the budget of all Gulf countries, but it varies from one country to another. Therefore, the increase or decrease is also related to oil exports. Country.

Oil revenues account for nearly two-thirds of the Saudi budget, estimated at 492 billion riyals this year, compared to 291 billion non-oil revenues, accounting for 95 percent of Abu Dhabi's revenues and 94 percent of the government's budget revenues. Kuwait.

In Bahrain, oil revenues account for 78.3% of budget revenues, while in Oman, oil accounts for 70% of projected revenues for the current fiscal year, while in Qatar, the budget of 2011 provided for 76% of total government revenue.

The third important factor in determining how far oil prices affect the Gulf economies is the expected price of a barrel of oil for the current year 2018, the fair price of a barrel of oil from each country's point of view. and the equilibrium price that the producing countries are seeking to achieve in order to achieve a balance between spending and income And not getting into the budget deficit crisis.

Saudi Arabia has estimated the price of a barrel of oil at an average price per barrel of between 57 and 58 dollars a barrel in the budget, while you need 70 dollars a barrel to come up with a draw.

Kuwait estimated the price when calculating the budget at $ 50 and set the price of the draw at $ 47.1 per barrel, while Qatar set the price of oil at $ 45 and the required price of $ 47.2. dollars a barrel.

The UAE has not announced budgeted oil prices for their federal budget, but local reports suggest that the price of oil in the 2018 budget is 50 dollars a barrel and that it needs $ 61.7 per barrel to achieve a balanced budget.

Bahrain's budget assumes that the average price of oil is 55 dollars a barrel, while it needs 95.2 dollars a barrel to reach parity, while Oman assumes that the average price of the oil is oil is 50 dollars a barrel and that the revenues and expenses are equal, the price of a barrel of oil should be 76.3 dollars. Per barrel.

Expected losses

According to "New Arab" calculations, assuming that Saudi Arabia exports an average of 7.5 million barrels a day, it exports about 219 million barrels a month, with monthly revenues estimated at 18.6 billion barrels a month. dollars, assuming a price per barrel of $ 85 and a price of $ 58.7 billion. Supposed to be estimated at about $ 6 billion in a month.

The same rule was applied to the calculation of the expected losses of the remaining oil-exporting Gulf countries on the basis of the quantity exported during the month, multiplied by the barrel price of the hypothetical maximum of $ 85 and the assumption the lowest is also $ 58. The results are as follows:

Abu Dhabi exports an average of 2.4 million barrels a day and 72 million barrels a month, with monthly revenues estimated at a maximum of US $ 6.1 billion, a minimum of US $ 4.1 billion and a loss of estimated at about US $ 2 billion.

Kuwait's exports reach about 2.06 million barrels a day and about 60 million barrels a month, with a monthly turnover of up to $ 5.1 billion and a minimum of $ 3.5 billion. , with a default loss of $ 1.6 billion.

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The Sultanate of Oman exports an average of 770,000 barrels a day and 23 million barrels a month, with hypothetical revenue of up to $ 1.96 billion, a minimum of $ 1.33 billion and a default loss $ 0.63 billion.

Qatar's oil exports average 484,000 barrels a day and 14.5 million barrels a month, with revenues estimated at a maximum of $ 1.23 billion, a minimum of $ 841 million and a alleged loss of revenue of $ 389 million in one month. Nearly a billion dollars).

Bahrain's average oil exports are estimated at about 152,000 barrels per day, or 4.5 million barrels per month, for an estimated revenue of about $ 387.6 million and a minimum of $ 261 million.