Surging Oil Is Budget Boon for the Middle East’s Exporters - Bloomberg

Surging Oil Is Budget Boon for the Middle East’s Exporters - Bloomberg

Oil’s surge has pushed crude above the break-even level for almost all the Middle East’s producers, raising the prospect of significant budget surpluses for even the weakest economies if prices remain high.

Russia’s invasion of Ukraine lifted crude prices over $105 a barrel for the first time since 2014, extending gains earlier propelled by economies around the world reopening after coronavirus lockdowns.

The fighting in Europe means OPEC member states like Saudi Arabia and the United Arab Emirates are set for an even bigger windfall, and there’s a chance that even Bahrain, the region’s smallest economy, could record a balanced budget for the first time since 2008 -- if crude remains elevated.

Brent jumped by more than 9% in the hours after President Vladimir Putin ordered Russian forces to strike Ukraine. The International Monetary Fund estimates prices at that level would ensure all the main oil producers in the Middle East, except Bahrain, record a budget surplus.

Saudi Arabia, which needs oil at about $72 a barrel to balance the books, already said it expects to record a surplus this year. For the UAE, that figure is about $67 a barrel. Bahrain needs prices in excess of $106 a barrel.