Issue 14 - Multiples Group

Jun 14, 2017 - War 73. In 1980 was the peak, oil prices increased to. 109 USD. 1986 to ... China. Canada. Iran. UAE. Iraq. Mexico kuwait. Top Oil Producers.
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Issue 14 June, 2017

Oil Prices and the Impact on GCC Countries

Table of Contents

Introduction Q1 What is the historical and forecasted oil price? And who are the top oil producers? Q2 What are the factors contributing to the decline in oil prices? Q3 What is the impact of falling oil prices on GCC countries?

Q4 What are the challenges facing GCC countries and how are they reacting? Conclusion

1

Introduction

The drop in oil prices has severely affected the countries of the Gulf Cooperation Council (GCC). This has lowered government revenues and in return negatively affected spending plans. Oil prices decline is expected to continue in spite of the GCC governments efforts to support non-oil sector revenues to fund their spending programs and reinforce the regional economic growth and diversification. In addition, the oil price drop has negatively impacted the RHC sector (real estate, hospitality and construction) across the GCC with a slowdown that is expected to continue over the next few years. However, the governments commitment to host mega events, such as Expo 2020 Dubai, 2022 FIFA World Cup Qatar and various national initiatives of the GCC governments should boost that sector as well as the overall economy performance.

2

What is the historical and forecasted oil price? And who are the top oil producers? Question 1

History and Forecast In 1980 was the peak, oil prices increased to 109 USD

Brent Crude Oil Prices USD per Barrel (1970-2020E)

120

Increased in 2008 reaching 102 USD

Decline started in 2015 reaching 50.8 and will continue declining until 2020

100 80 60

1986 to 2003 witnessed a huge decline in oil prices with average 32 USD In 90s First Gulf War: oil prices dropped by 48%

First boom after War 73

40 20

In 80s OPEC abandons

1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E

0

➢ Global oil prices had declined during the second half of 2014 and continued to fall downward reaching 43 USD per barrel in 2016. ➢ Oil prices are expected to slightly increase in 2017 reaching 53.2 USD per barrel, with no significant increase expected during the next few years 2018-2020.

3

What is the historical and forecasted oil price? And who are the top oil producers? Question 1

Top Oil Producers & Exporters

Top Oil Producers (2016, million barrels per day) 11.7

12.5 11.1

10.4

2016 4.1

Saudi Arabia

Top Oil Producers (Expected in 2017, million barrels)

United States

Russia

China

3.8

Canada

11.5

2017E

10

4.7 3.5

Iran

3.2

2.97

2.93

2.79

UAE

Iraq

Mexico

kuwait

U.S.

Russia

Saudi Arabia

Canada

4.5

Iraq

3.9

China

3.8

Iran

3

2.8

2.7

2.3

UAE

Brazil

Kuwait

Mexico

Top Crude Oil Exporters by Country (2016, BN USD) 136.2 73.7 46.3 39.5 38.9 30.7 29.1

4

27

25.2 22.6 20.4 19.4 15.5 14.6 13.3

➢ The top oil producer in 2016 was Saudi Arabia, while in 2017 U.S was the top followed by Saudi Arabia. U.S will be the top producer in 2017 as result of Donald Trump win in elections. ➢ On the other hand, the top exporter is Saudi Arabia