Saudis Could Withstand $30/Barrel, 10/20/08

According to Merrill Lynch's quarterly report on the Middle East region, Saudi Arabia and other Gulf oil producers in the region are "well placed to weather the sharp decline of oil prices." While other Middle Eastern oil producers may need a higher price threshold, Saudi Arabia could handle prices as low as $30.00/barrel. In its previous quarterly report, when oil prices were hitting record highs between $135-$150/barrel, Gulf oil producing countried like Saudi Arabia, Kuwait, Oman, Bahrain, Qatar, and the United Arab Emirates were able to achieve a current account surplus of over $1 billion per day. In light of the recent economic crisis, these countries will have to fall back on profits saved and accumulated in recent years for just such an occasion. Merril Lynch's report defined just how low a price each country could handle while still maintaining current budget spending. Saudia Arabia's breakeven oil price was the lowest at $30/barrel, on the other end of the spectrum, Kuwait could only really afford prices as low as $75/barrel. All but two of the nations reported on in the Merrill Lynch quarterly report are members of OPEC, and along with Iran, Saudia Arabia, Kuwait, Qatar, and the UAE account for over 60% of the world's known crude oil deposits. It will be interesting to see how OPEC handles the situation in their upcoming extraordinary meeting.

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