GCC oil income dips by $220bn in 2009

A sharp decline in crude prices and output is expected to have slashed the combined income of Gulf oil producers by nearly $220 billion (Dh807bn) in 2009 but the earnings remained far above their level in early 2000s.

From a record $522bn in 2008, the collective oil export revenues of the six-nation Gulf Co-operation Council (GCC) are projected to have plunged to nearly $302bn in 2009.

According to the Energy Information Administration (EIA) of the US Department of Energy, the income of the Gulf Opec members – the UAE, Saudi Arabia, Qatar and Kuwait – stood at around $280bn in 2009.

With Oman's oil earnings estimated at nearly $18bn and those of Bahrain at about $4bn, the GCC's total oil export earnings stood at $302bn. In 2008, Oman's income climbed to a record $25bn and that of Bahrain to nearly $5bn, pushing the total GCC income to its highest ever level.

The GCC's 2009 income is lower than the 2007 earnings of $328bn and the 2006 income of nearly $313bn.

But it was far higher than the revenues achieved in the previous three years of $261bn, $188bn and $137bn respectively. It was also more than quadruple the 1998 income of about $70bn.

Official figures showed the decline in the GCC's income in 2009 was caused by a 42 per cent drop in average crude prices to about $60.9 a barrel from a record $94.5 in 2008. The GCC's oil output also slumped by nearly 9.5 per cent from an average 15.88 million barrels per day in 2008 to 14.27 million bpd in 2009 as most of them cut supplies in line with Opec's collective agreement.

The figures by the Riyadh-based International Energy Forum (IEF) showed the largest decline was in Saudi Arabia's output, which plunged from nearly 9.3 million bpd to around 8.2 million bpd in the same period.

The UAE and Kuwait slashed output from an average 2.6 million bpd to 2.24 million bpd each, while Qatar's production fell to around 780,000 bpd from 850,000 bpd. Bahrain's output remained unchanged at 180,000 bpd, while non-Opec Oman boosted its production to 810,000 bpd from 750,000 bpd.

Oil accounts for more than a third of the economy of the GCC nations and the decline in the income is expected to have depressed their nominal gross domestic product by nearly $236bn in 2009.

According to the Saudi American Banking Group (Samba), Saudi Arabia and the UAE were the main victim as they accounted for nearly 87 per cent of the total decline, the first fall in their collective economy in six years.

From a record $1.0237 trillion in 2008, the GCC's combined GDP was expected to have dived to nearly $801.6bn in 2009, Samba said.

The decline followed a whopping increase of nearly $215bn in the GCC's GDP in 2008 over the previous year because of higher prices and output.

The surge in the GCC's crude export earnings during the last oil boom allowed them to accumulate a massive cumulative fiscal surplus of $564bn during 2005-2008, including about $272bn in 2008 alone.

The cumulative surplus was estimated at $129.7bn in the UAE, $335.8bn in Saudi Arabia, $71.2bn in Kuwait, $16.5bn in Qatar, $6.7bn in Bahrain and around $4.9bn in Oman.

 

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