IMF: Oil Price Decline Represents Key Challenge to GCC Countries

Oil demand would peak by around 2040, says IMF report. Reuters
Oil demand would peak by around 2040, says IMF report. Reuters
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IMF: Oil Price Decline Represents Key Challenge to GCC Countries

Oil demand would peak by around 2040, says IMF report. Reuters
Oil demand would peak by around 2040, says IMF report. Reuters

The International Monetary Fund (IMF) said analysis of past oil market developments revealed “a strong and sustained declining trend in the global oil demand, after accounting for income and population growth.”

Oil demand “would peak by around 2040 in our benchmark projection or much sooner in scenarios of a stronger regulatory push for environmental protection and faster improvements in energy efficiency.”

According to the IMF staff study, at the current fiscal stance, fiscal sustainability will require significant consolidation in the coming years.

Growth of global demand for natural gas is also expected to slow, the Fund said, “although it is expected to remain positive in the coming decades.”

The report said the oil market has experienced a significant turnaround in recent years due to technological advancements as well as climate change concerns. This represents a challenge to the six-nation Gulf Cooperation Council (GCC) that accounts for over one-fifth of global oil supply.

Long-term fiscal health requires that average annual non-oil primary deficits decline from a current level of 44 percent of non-oil GDP to less than 10 percent by 2060.

“Managing the long-term fiscal transition will require wide-ranging reforms and a difficult inter-generational choice. Continued economic diversification will be important but would not suffice on its own. Countries will also need to step up their efforts to raise non-oil fiscal revenue, reduce government expenditure, and prioritize financial saving when economic returns on additional public investment are low," the IMF added.

The sudden and unexpected oil price decline of more than 50 percent during 2014-15 was among the largest in the past century, according to the report. “It amounted to a transfer of nearly USD6.5 trillion from oil-exporting to oil-importing countries, in the form of cumulative oil revenue decline, between 2014 and 2018. Many oil-exporting countries are still adjusting to the effects of this oil price decline.”

The 2014 oil price slump led to large fiscal deficits but has also served as a catalyst for significant reforms in GCC countries, according to the report.

Global oil demand will peak around 2041 at about 115 million barrels a day and gradually decline thereafter as the demand-reducing effects of improvements in energy efficiency and increased substitution away from oil begin to dominate the weakened positive impact of rising incomes and population.



Saudi Industry Minister Discusses Economic Partnership, Industrial Integration with Kuwaiti Ministers

The meetings in Kuwait were aimed at strengthening bilateral economic ties and supporting industrial integration. SPA
The meetings in Kuwait were aimed at strengthening bilateral economic ties and supporting industrial integration. SPA
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Saudi Industry Minister Discusses Economic Partnership, Industrial Integration with Kuwaiti Ministers

The meetings in Kuwait were aimed at strengthening bilateral economic ties and supporting industrial integration. SPA
The meetings in Kuwait were aimed at strengthening bilateral economic ties and supporting industrial integration. SPA

Saudi Minister of Industry and Mineral Resources Bandar Alkhorayef, during his visit to Kuwait, has met separately with Kuwaiti Minister of Commerce and Industry Khalifa Abdullah Al-Ajeel and Minister of Oil Tareq Sulaiman Al-Roumi.

They discussed enhancing the strategic economic partnership between the two countries and expanding avenues for industrial cooperation and integration.

They stressed the importance of supporting trade and joint investments to foster economic growth and diversification in both Saudi Arabia and Kuwait.

Alkhorayef’s meeting with the Kuwaiti minister of commerce and industry highlighted the deep-rooted and robust historical ties between the two countries, which serve as a key foundation for strategic economic partnerships across various sectors, particularly the industrial sector.
The meeting emphasized the importance of strengthening industrial integration to advance sustainable industrial development and support economic diversification in Saudi Arabia and Kuwait.
Alkhorayef’s talks with the two Kuwaiti ministers were aimed at strengthening bilateral economic ties, supporting industrial integration, and exploring joint investment opportunities in the industrial and mining sectors.