Gulf economies now appear fairly firmly on track for historically high surpluses, according to a new report from the National Commercial Bank (NCB).
It said the Institute of International Finance had estimated that the GCC countries can expect to reap record oil revenues of $ 572 billion this year. Last year’s intake was $ 538 billion.
The GCC countries have enjoyed an exceptional fiscal windfall since the oil price rebounded from its lows of late 2008-early 2009, it said.
Apart from the benign price environment, the GCC producers have generally boosted their output levels, initially in response to production disruptions in Libya and subsequently also in connection with the tightening sanctions on Iran, according to the report.
It said the fiscal windfall has in turn made it easier for the GCC governments to continue with a generally permissive fiscal policy.
The continued tightness of the oil market represents a significant fiscal windfall for the GCC at a time when fiscal break-even prices have gone up fairly rapidly.
In spite of the generally positive supply trends, the oil market fundamentals remain fairly tight.
The NCB’s GCC economic review also said marginal costs of production are going up almost everywhere because of smaller, more remote fields and lower grade oil which costs more to drill, move, and refine, and produces less energy for a unit of input.
It said 85 percent of the oil sold globally now has a higher sulfur content than either of the two main benchmarks.
Global oil supply in July was estimated by the IEA at 90.7 mbd, some 2.6 mbd up from last year. OPEC accounted for 80 percent of the increase, although roughly 75 percent of the output came from non-OPEC producers.