KAMCO ECONOMIC REPORT
be keenly followed. On the other hand, according to the IMF, GCC oil exports are projected to be lower than expected in April 16. Oil exports from the region were brought down from 13.48 mb/d to 13.37 mb/d in 2016 and from 13.46 mb/d to 13.37 mb/d in 2017. The drop is ascribed to a decline in exports from UAE & Saudi Arabia and is likely to be due to the weaker global trade conditions and rising domestic consumption, in our view.
In terms of the breakeven oil prices required for GCC countries to balance their fiscal budgets, all countries were running deficits, as oil prices YTD were lower than all individual breakeven targets. As per our analysis of IMF data, the gap between average oil prices and budgeted breakeven oil prices were largest for Bahrain and Saudi Arabia at over $56/bbl and $40/bbl respectively. Kuwait and UAE had the least gap between their budgeted oil prices and average oil prices YTD in 2016 with a gap of over $8/bbl and $19/bbl. Moreover, Kuwait is expected to be the only GCC country that is able to balance its fiscal budget when oil prices are below $50 per barrel, as per the IMF, as Kuwait has the lowest breakeven oil price of $47.8/bbl and $47.7/bbl for 2016 & 2017. The breakeven oil prices for Kuwait were lowered since April-16 by $4.3/bbl and $5.1/bbl for the aforementioned years. UAE’s fiscal breakeven oil prices was lowered by double digits, and would now require $58.6/bbl and $60/bbl for a fiscal neutral budget. On the contrary, the same estimates for Saudi Arabia were raised, in particular for 2016, by $13/bbl, as the country would now need an oil price of USD 79.7/bbl to balance its fiscal budget as against $66.7/bbl estimated in April16. As per our calculations, in order to reach the average oil price of $50/bbl, oil prices would now need to average over $100/bbl, which we deem as highly unlikely, given the fundamentals of the market.