Kuwait Times - - BUSINESS -

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.

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