The World in 2021 The end of a golden age for oil producers:

Arab oil producers, who have been in a dilemma lately, continue to report that they will not lower their economies below the bar because the low prices.

Rising costs cannot afford lower prices, production falls, demand rises, and prices are starting to pick up again. Wondering whether this vicious circle is over, the officials say reforms are inevitable. The decline in demand caused by Covid-19 caused the Brent crude oil barrel price to drop to $ 21 in 2020. Prices, which are expected to reach $ 50 in 2021, will not be enough to balance the budgets of Middle Eastern oil producers. In light of the developments, it is estimated that Saudi Arabia, the largest oil producer in the region, will turn to non-oil income seeking. Saudi Arabia increased the value added tax three times to 15 % last year. The realization that this increase is not temporary has created disappointment among Saudi citizens, especially contractors and public employees struggling with late payments. The Kingdom will also delay mega projects such as the 500 billion-dollar high-tech city Neom in the northwest desert and the planned Red Sea Resort, larger than many European countries. During this time, the immigrant will start to exit the labor market and turn to their contries. Citizens of The Kingdom start working cheap employment abandoned. This will increase the public dissatisfaction. Meanwhile, Dubai will turn into darkness. Many newly built high-rise apartments and villas will remain empty. The United Arab Emirates will lose 1 million immigrants, representing one tenth of its population. Others, whose salaries are cut, will send their families back and move into smaller apartments to cut costs. Construction and real estate prices will lose 10 % in value. Dubai will receive delayed support after the launch of the World Expo in October 2021. Kuwait will take advantage of the bond markets to close the deficit of up to 15 percent of GDP and will have to pay more debt for the public sector. Already congested Bahrain and Oman will have more difficulty borrowing. The situation will get more difficult in countries outside of the Gulf. Iraq, for example, will cut spending to meet its inflated payroll. Foreign reserves of 200 billion dollars in 2014 will fall below 40 billion dollars. There is no relief in the short term. Oil demand will remain low, with OPEC + members adhering to tight production limits in 2020, pumping more in a bid for market share. Iran will send more crude oil to the market, thanks to President Biden's new policy. Kings and ministers in Arab countries will understand that they need to structure their own economies and wonder if it is too late for these decisions.

"This article was published in The World magazine under the title" The end of the black golden age. "

Source:The Economist

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The World in 2021 The end of a golden age for oil producers