Mubasher: Moody's expects oil prices to remain low, moving within a $40-$60 per barrel range over the medium term, according to a recent report entitled "Sovereigns - Gulf Cooperation Council: FAQ on Implications of Recent Oil Price Fluctuations."
In June, Moody's raised its nearer term oil price estimates for Brent crude to $40 per barrel in 2016 and $45 in 2017.
"While we have revised upwards our near-term estimated prices for oil, our medium-term expectation of 'lower for longer' oil prices remains unchanged,” the report indicated.
“We therefore expect GCC countries to continue to face economic, fiscal and external challenges," says Steffen Dyck, a Senior Credit Officer at Moody's.
"Given the significant challenges ahead, government actions to address structural problems exposed by significantly lower oil prices will remain key to sovereign creditworthiness," it added.
Kuwait, Qatar and Oman are set to be the main beneficiaries of higher oil prices in the short term, given the larger reliance on oil for government revenues. Moody's now forecasts a deficit of 3.0% of GDP for Kuwait, 5.5% for Qatar and 15.1% for Oman in 2016.
