Qatar had the lowest fiscal breakeven oil price of $48.8 per barrel this year and is expected to be even lower at $45.7 by 2020 and Doha possesses a cushion of $15.2 a barrel to balance its 2019 budget, according to the estimates by Kamco.
Moreover, the non-oil economy is expected to be the strongest in Qatar (within the Gulf region) which is expected to grow oil GDP (gross domestic product) by 3.4% in 2019 and by 3.6% in 2020 led by the preparations for the World Cup in 2022, Kamco said in its report.
“In terms of the breakeven oil prices for 2019 and based on average oil prices seen in YTD (year-to-date)-2019 ($64), only Qatar and Kuwait are expected to be in a comfortable position in terms of spending on budgeted expenditure,” it said.
Kuwait was next with a fiscal breakeven oil price of $54.3 for 2019 and marginally higher $54.7 for 2020, it said, adding the negative spread between average oil prices and budgeted breakeven oil prices is estimated to be largest for Bahrain and Oman at around $31.2 and $23.3 respectively.
Nevertheless, barring Oman, fiscal breakeven oil prices for all the other Gulf Co-operation Council economies were raised for 2019 compared to May-2019 estimates, which shows the impact of the expected fall in production for 2019.
The external factors have contributed even more to the oil dilemma of either to produce more and sell cheap or produce less and expect an increase in prices due to the supply shortfall, it said.
These external factors primarily include the breakneck speed at which the US is increasing oil supplies from the shale sources, the report said, adding it also includes the expected decline in oil demand due to the global economic slowdown that is making the glut in the oil market even more pronounced.
“Given that there are no catalysts in the near term that could boost oil demand coupled with a number of fragile factors on the supply front, we believe that crude oil would trade in a tight range in the near term,” Kamco said.
Taking cues from global weakness and the rising geopolitical issues in the region, the International Monetary Fund (IMF) lowered its GDP growth forecasts for the Middle East and North Africa region.
The revisions were noticeable for the Gulf countries led primarily by lower oil output expectations for key oil exporters in the region, it said, quoting IMF that projected real GDP for the region to grow at 0.7% for 2019 down from 2% in 2018.
Growth rate (in the region) is expected to pick up to 2.5% in 2020, according to the report.
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