Global COVID-19 Pandemic and Potential Oil Supply Glut Pose Serious Risk to the Public Finances of GCC States

Overview

Over the past three weeks, global oil markets have been rattled by large demand and supply shocks which have triggered a sharp decrease in oil prices. If not quickly reversed, this is set to significantly weaken the public finances of GCC countries. Forecasts of global oil demand in 2020 have been reduced markedly in recent weeks as the ongoing spread of the coronavirus disease (COVID-19) has led to a sharp decrease in global economic activity. Apart from weakening oil demand, oil prices have also been hit by fears of a global oil supply glut following the decision of OPEC+ countries to discontinue their cooperation. The agreement  – which had cut OPEC+ oil production by a combined 2.1 million barrels per day (bpd) – will expire at end of this month.

Attachments

• Non-Rating Action Commentary (CRA)
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