High oil prices boost Gulf incomes

High oil prices boost Gulf incomes

ABU DHABI (AFP): Oil export earnings of six Gulf Arab states
in the first half of 1996 hit their highest level since the oil
boom of the early 1980s as crude prices climbed to a 13-year
high, experts said yesterday.

Despite fluctuating crude production by Gulf Cooperation
Council (GCC) countries, their revenues during the first half
were the highest since 1983, they said.

"Compared with the first half of 1995, the GCC's earnings from
oil sales increased by at least US$2.5 billion in the first half
of this year due to the price improvement," an Abu Dhabi-based
oil analyst said.

"Initial estimates showed the first half income stood at
around $38 billion, the highest six-month level since the end of
the oil boom," he added.

The price of OPEC's basket of seven crudes averaged $18.83 in
the first half of 1996 compared with $17.40 in the first half of
1995.

Its previous highest level since the oil boom was in the first
half of 1991, when it stood at $18.25, according to OPEC's news
agency OPECNA.

Oil prices have remained high this year even though the
Organisation of Petroleum Exporting Countries (OPEC) produced
nearly one million barrels per day (bpd) above its nominal output
ceiling.

Iraq's imminent return to the oil market for the first time in
six years, under a UN-agreed oil-for-food deal, has also failed
to dent the high prices.

GCC states-- Saudi Arabia, Kuwait, Qatar, Bahrain, Oman and
the United Arab Emirates (UAE)-- produce around 13.4 million bpd,
nearly one fifth of the world's total crude supplies. Around 11.5
million bpd of their output is exported, mostly to Japan and
other industrial nations.

Bankers said the surge in oil prices would help GCC states in
tackling their budget deficits, which started to appear after oil
prices began to fall in the mid 1980s. They noted the six
countries usually assume an oil price of $14-16 a barrel when
calculating their annual budgets.

"With oil prices exceeding $18 in the first half, this means
they are two to $3 above the level projected in the GCC budgets.
This could wipe out the shortfall during that period unless, of
course, Gulf governments were tempted by the price rise to spend
more," one banker said.

Saudi Arabia, Oman and the UAE, which have issued their 1996
budgets, have forecast a deficit while the other three members
are expected to suffer from a shortfall in their budgets for the
fiscal year 1996-1997.

Oil provides more than 80 percent of the income of GCC
countries, and at current levels their oil reserves could last 95
years.