Cheap oil comes at a price for Middle East - FT.com

Cheap oil comes at a price for Middle East - FT.com:

"Most of us would look at a map of the Middle East and think: lots of oil. Almost a third of the world’s crude comes from there. A Saudi-led Opec strategy to increase production has effectively pushed prices down hard, towards $30 per barrel.
These lower prices have provided some positives for developed economies. Cheaper petrol has spurred gasoline demand in major markets such as the US — on average, consumption was up nearly 4 per cent last year. Increasingly desperate oil bulls point to this rising demand as putting a floor under prices.
Yet for all the pluses, Saudi Arabia may wish to reconsider its ‘more-supply-at-any-cost’ strategy. Low energy prices could cause as much harm as good to oil demand. For one thing, lower export revenues have damaged the economies of Saudi Arabia and other producer states. This year, Saudi economic output will grow at the slowest pace since 2009 according to Credit Suisse. Worse, a budget deficit looms of 15 per cent of GDP."



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