Kuwait: MENA oil exporting countries: resilience to oil price shock
Over the past months, global oil prices have been hit by a significant downward shock. Mid-October, Brent crude oil prices had fallen by more than USD 30 since their peak of USD 115 mid-June, hitting a near fouryear low.
In the past months, the upward price effects of the escalation of severe security issues in Libya and Iraq and the conflict between Russia and Ukraine were outweighed by (so far) resilient oil production in Libya and Iraq, a strengthening dollar and weaker-than-expected worldwide economic performance.
Meanwhile, US production of hydrocarbon products continues to grow, largely thanks to a boom in nonconventional oil and gas production.
Impact on country risk
Lower international oil prices reduce the import bill of energy importing countries. However, energy exporting countries in the Middle East and North Africa (MENA), which houses the world’s largest conventional oil and gas reserves, see their incomes shrink as energy revenues represent up to 95% of total exports and public revenues.
Kuwait and Saudi Arabia are in the best position to deal with a fall in oil prices. In this additional assessment, an in-depth analysis is provided of the ability of MENA’s net oil and gas exporting countries to deal with negative oil price shocks.
Country risk analyst, Daan Rowies, Credendo Group
Disclaimer: Credendo Group has used its best endeavours to ensure that all the information, data, documentation and other material in this report are accurate and complete. Credendo Group accepts no liability for errors or omissions. The views expressed herein are the author’s personal views and are not intended to reflect the views of Credendo Group. Credendo Group will not be liable for claims or losses of any nature arising directly or indirectly from use of the information, data, documentation or other material from this report. The texts and illustrations can be printed for private use; distribution is permitted only after authorisation by Credendo Group. Quotations are permitted provided that reference is made to the valid source. Reproductions are permitted provided that reference is made to the valid source, unless for commercial aims, in which case reproduction, even with source indication, is not permitted.