Price of oil hurts Mideast economies
A number of oil industry analysts may see the price of crude poising for a rebound, but the ongoing lower price of oil is beginning to take a toll on Mideast economies that are highly dependent on petroleum income. OPEC has been unsuccessful in trying to drive the price of oil toward $75 since last year through a series of production cuts. Thus far, those efforts have moved the price of crude by a minimal margin.
Qatar is one oil-dependent nation that is feeling the pinch. Its most recent budget from earlier this month projects the first deficit seen this decade. Speaking at the recent Asia Ministerial Energy Roundtable in Tokyo, the Oil Minister of Qatar, Abdullah Bin Hamad Al-Attiyah, said, “For the first time in a quarter century, world demand for oil is falling; the price has collapsed since July 2008. Companies almost everywhere are freezing investment and re-evaluating energy projects based on high prices.”
Al-Attiyah went on to add, “Low prices and the resulting drop in income of producing countries is creating problems for their economic stability and investment in additional capacities essential for the future. The illiquidity of global financial markets is also making it difficult for companies to invest, even in high-return projects.”
Baker Hughes Inc., has published data indicating the number of oil and gas rigs operating around the globe has fallen by 34 percent since September. A barrel of light, sweet crude hit its recent high on July 11, 2008, at $147.27. It has since fallen by nearly 65 percent.
Qatar’s projected deficit is based on an assumed average of $40 per barrel, a downward correction from the previous budget’s assumption of $55 per barrel. The latest Qatari budget also includes spending cuts of 1.5 percent.
Sources for this post include theage.com.au and arabianOilandGas.com.
Published Thursday, April 30th, 2009 at 9:24 am and filed under Industry News.