Oman will cut spending this year by 15.6 percent in the face of lower oil prices but still face a huge deficit after posting one in 2015, Finance Minister Darweesh Al-Bloushi said.
Spending is projected at 11.9 billion riyals ($30.9 billion/28.3 billion euros) in 2016 compared with $36.6 billion, a statement from Al-Bloushi said
Revenues are projected at 8.6 billion riyals ($22.3 billion), down a massive 26 percent from 2015, resulting in a deficit of $8.6 billion, said the statement cited by the official ONA news agency.
Oman’s deficit last year was $11.7 billion.
Gulf states have been hit hard by a cash crunch due to a 65-percent drop in oil prices since June 2014.
Most of them have introduced austerity measures, and Oman said Wednesday it has decided a series of measures to boost nonoil revenues.
Global oil prices pared ended 2015 sharply lower as the “black gold” was battered by prolonged global oversupply and a slowdown in energy-hungry China’s economy.
North Sea Brent, the European benchmark for oil, dropped almost 35 percent over the year, while the US benchmark West Texas Intermediate (WTI) fell 30 percent.
“With Brent crude oil hovering near 11-year lows and WTI not faring all that much better, the markets are ending the year on a somber note, consistent with what we see as ongoing physical oversupply,” said Tim Evans of Citi Futures.
The key futures contracts finished Thursday with modest daily gains.
WTI for delivery in February rose 44 cents to close at $37.04 on the New York Mercantile Exchange.
In London, Brent for February delivery rose 82 cents to $37.28 a barrel.
The modest rebound Thursday may stem from investors trying to minimize risks after betting on prices to fall ahead of the long New Year’s weekend, said Andy Lipow of Lipow Oil Associates.
“It could be simply end-of-year short-covering because the market has been so bearish,” he said, “and people squaring their positions.”
Crude prices have particularly slumped since December 4 when the Organization of the Petroleum Exporting Countries decided against limiting production as members fight to keep market share.
Also weighing on market sentiment was China as growth slowed in the economy of the world’s largest energy consumer.
Iran was poised to boost crude exports after sanctions are lifted, part of its landmark nuclear agreement with major powers.
“We know the market is oversupplied and as we go into 2016 the market will await the return of Iranian oil,” Lipow said.
Potentially adding to the supply worries was action by the US Congress earlier this month to end the 40-year-old US ban on exports of crude oil producted in the country.
NuStar Energy and ConocoPhillips announced Wednesday they were loading “what they believe to be the nation’s first export cargo of US-produced light crude oil” since the ban was lifted.
Source: Arab News