Coronavirus, oil plunge to pressure MEA sovereigns - Fitch | ZAWYA MENA Edition:
A sharp drop in oil prices, the outbreak of coronavirus as well as a slump in tourism and a weakening demand for non-oil exports add to rating pressures for Middle East and Africa (MEA) sovereigns, Fitch Ratings said.
Earlier in March, OPEC failed to strike a deal with its allies, led by Russia, on oil production cuts. This means members can now pump what they like starting April 1.
Saudi Arabia slashed crude prices for April and planned output hikes after Russia refused to support deeper oil production cuts.
Brent oil prices plunged as a reaction to the news and have been trading close the $35 a barrel since, down from the $51 a barrel level recorded at the beginning of March.
“Fiscal deficits will consequently widen in all oil producers. For countries in the Gulf Cooperation Council (GCC), we estimate that a change of USD10 in the price per barrel of oil tends to affect government revenues by 2%-4% of GDP,” Fitch said in a note.
According to the rating agency, the break-even oil price for Bahrain at $96 a barrel, for Saudi Arabia at $91 a barrel, for Oman at $82 a barrel, for Kuwait at $68 a barrel, for Abu Dhabi at $65 a barrel, for Qatar at $55 a barrel.
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