UAE oil income to rise by over $20bn

Emirate earned nearly $68 billion from oil and gas sales in 2009, says IIF

Higher crude production and prices will likely boost the UAE’s oil export revenue by more than $20 billion in 2010 and the income will remain high through 2011, according to a key Western financial centre.

The UAE earned nearly $68 billion from oil and gas sales in 2009 and the income is projected to surge to about $88.2 billion this year, the Washington-based Institute for International Finance (IIF) said in a study.

The increase will boost the country’s total exports from nearly $192 billion in 2009 to around $224 billion in 2010, their second highest level since they peaked at around $239 billion in 208 when crude prices hit an all time high of $95.

IIF expected the UAE’s oil export earnings to swell further to nearly $91.6 billion in 2011 but they remain below the record high income of $102.6 billion in 2008.

Its projections were based on an average oil price of around $80 this year and in 2011 compared with $61.8 in 2009. The study also assumed the UAE’s crude output at around 2.38 million bpd in 2010-2011 against 2.28 million bpd in 2009 and as high as 2.59 million bpd in 2008.

Figures by the US Energy Information Administration showed strong oil prices have already boosted the UAE’s crude export income by nearly $15 billion in the first 11 months of 2010 while that of other GCC nations also surged.

The figures showed the UAE’s crude export earnings stood at around $61 billion in the first 11 months of this year against $46 billion in the same period of 2009.

It was the UAE’s highest income for such a period and the earnings are expected to climb to their second highest level through 2010 after their 2008 peak.

According to IIF, higher oil prices and production will likely boost the UAE’s hydrocarbon sector by around 1.6 per cent this year after an eight per cent contraction in 2009. It put growth at 2.6 per cent in 2011.

Higher exports will also sharply widen the UAE’s current account surplus from around $8.2 billion in 2009 to $14.9 billion in 2010 and nearly $17.2 billion in 2011, according to IIF. This will boost its ratio from about 3.8 per cent of GDP to around 5.9 per cent in 2010 and 6.4 per cent in 2011.

But the report expected a small deficit in the country’s consolidated financial account (CFA), which includes the federal budget and spending by each emirate. It put the shortfall at around 1.5 per cent of GDP compared with nearly 12.1 per cent in 2009 and a massive surplus of 12.3 per cent in 2008. The report expected the deficit to further decline to about 0.5 per cent in 2011 due to high revenue.

The surge in income will also allow the UAE to replenish its official financial reserves, which plunged to from a record high of around $77 billion at the end of 2007 to $40.2 billion at the end of 2009.  It forecast the reserves to rebound to nearly $42.3 billion at the end of 2010 and $52 billion at the end of 2011.

IIF put real non-oil GDP growth at 2.2 per cent in 2010 and 3.5 per cent in 2011 compared with a contraction of 0.2 per cent in 2009. Growth in the oil sector is projected at 1.6 and 2.6 per cent and this will expand the country’s overall real GDP by around 1.6 per cent this year and 2.6 per cent in 2011.

In nominal terms, the UAE’s GDP will gain more than $20 billion to swell to around $250.9 billion and continue its climb to reach $267.8 billion in 2011 to maintain its position as the largest Arab economy after Saudi Arabia.


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