publish time

02/03/2020

author name Arab Times

publish time

02/03/2020

KUWAIT CITY, March 2: Informed sources expected Kuwaiti oil prices will drop further in the last quarter of fiscal year 2019/2020 to settle at USD 55 per barrel on the average, bringing the expected fiscal deficit up to a billion dinars and raising the budget deficit to KD 4.5 billion at the end of the current fiscal year 2019/2020, reports Al- Nahar daily.

Kuwaiti oil prices so far have declined by USD 20 per barrel since announcing the repercussions of coronavirus on Jan 1, 2020 and approximately USD 2.5 billion is expected to be lost in oil revenues within just two months on the basis of exporting two million barrels per day.

Prices are likely to decline to USD 45 per barrel by the end of the current month (March) amid expectations of major decline in demand for oil over the last quarter of the current fiscal year 2019/2020, bringing the average price over a period of three months up to USD 55 per barrel, which means the loss of about one billion dinars in oil revenues that automatically increases the budget deficit by a billion dinars. Oil prices have continued to decline continuously since the announcement of the spread of the coronavirus with Kuwait losing up to USD 20 a barrel since the beginning of January, while it’s estimated to lose approximately USD 25 per barrel.

Price
The price of Kuwaiti oil since Jan 1 was about USD 70 and fell by USD 10 at the end of the same month, declining further to reach USD 50 in February. Kuwait’s average price for a barrel of oil for the month of February reached USD 56.1, declining nearly USD 19.

This means that budget deficit recorded therein amounted to USD 1.1 billion (approximately KD 333 million). The national budget had achieved a deficit of KD 2.26 billion until January 2020 after deducting 10 percent of the reserve for future generations, which means increasing the deficit to KD 2.6 billion by the end of last February. Ministry of Finance also announced that national budget for 2019/2020 achieved KD 14.3 billion after 10 months at a rate of 90.4 percent of the total estimated sum of KD 15.8 billion, indicating the total expenses amounted to KD 16.5 billion, out of the total estimation of KD 22.5 billion.

In this regard, oil prices tumbled to their lowest in more than a year, putting them on track for the largest weekly decline in more than 4 years, while the rapid spread of coronavirus fueled fears of a slowdown in global demand. The most active Brent crude contracts for delivery in May fell by USD 1.37 or 2.7 percent to reach USD 50.36 per barrel, the lowest in 14 months.