The rout of the April market, which crushed oil prices in $ 60 per barrel, creates additional budgetary challenges for oil countries and oil producing countries which depend strongly on oil income, in addition to any difficulties linked to prices.
While the prices of the crude Brent have flowed at $ 63 per barrel, the main producers of the Gulf region, as well as Brazil and Nigeria, seek to contain the fallout from prices. The Central Bank of Russia has already indicated that the drop in oil prices could reach its harsh economy.
Oil at $ 60 is about $ 20 to $ 30 per barrel lower than many major Gulf oil exporters must balance their budgets. For Saudi Arabia, the best world exporter of crude oil, its budgetary price is $ 91 per barrel, as estimated by the International Monetary Fund (IMF).
With prices much lower than the price of the profitability threshold, Saudi Arabia may have to accelerate government loans and slow down or delay expenses for its ambitious futuristic megalomaniac projects.
Another major Gulf oil producer, Kuwait, approved last month a law on financing and liquidity that will allow the fourth opeec producer to return to the debt market after eight years.
The Kuwait economy remains in recession due to the reductions in OPEC +production, said the International Monetary Fund (IMF) in December 2024, adding that the economy is “very exposed” to the volatility of raw material prices and a global slowdown.
The price crash last week does not help at all.
“The drop in the price of oil that we saw in last week took us to territory where for many savings dependent on oil, it will not be what they need to balance their budgets, nowhere,” Richard Bronze, energy geopolitics responsible for energy, said this week.
For Russia, the collapse of the oil market in recent days could present risks to the economy, said the governor of the Russian central bank, Elvira Nabiullina, earlier this week.
“If the climbing of pricing wars continues, this generally leads to a drop in world trade and the world economy and, perhaps, the demand for our energy resources. There is risks here,” said Nabiulina, quoted by the TASS news agency in Russia.
By tsvetana paraskova for ilprice.com
More top readings of OilPrice.com
