Moody’s Expects Surge in Oil to Dampen Islamic Bond Sales - Bloomberg

Moody’s Expects Surge in Oil to Dampen Islamic Bond Sales - Bloomberg

Surging crude is expected to lower oil-rich Gulf nations’ need to sell Islamic bonds, according to Moody’s Investors Service.

“We expect higher oil prices will lead to lower sukuk issuance in 2022, largely driven by lower financing needs” in the six-member Gulf Cooperation Council countries, analyst Ashraf Madani wrote in a report.

Higher oil has pushed crude above the break-even level for almost all the Gulf producers, raising the prospect of significant budget surpluses for even the weakest economies. Oil has rallied more than 30% since Russia’s invasion of Ukraine, and many traders and banks are betting prices will keep climbing.

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 United Arab Emirates, that figure is about $67 a barrel. The GCC comprises Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain.