The Gulf Cooperation Council’s borrowing requirements could drop to $10 billion over the next three years if oil prices remain elevated, according to Goldman Sachs Group.
If prices for the commodity average $65 a barrel and all else is equal, borrowing needs for the six countries comprising the council would drop 96 percent from what they’d be if oil traded at $45, Bloomberg reported, citing Farouk Soussa, an economist at the bank.
Oil prices have risen by almost 80 percent since the start of November to trade around $70 per barrel.
The price outlook was further buoyed last week when OPEC+ producers agreed to extend production cuts.
The average price needed to balance GCC members’ current accounts is relatively lower at $50 per barrel, Goldman said.
“The implications for sovereign balance sheets, creditworthiness and debt markets would be significant," according to Soussa.
“But we highlight the likelihood that some of the fiscal space afforded by higher oil prices is likely to be erased by higher spending."
According to Bloomberg, Gulf states raised about $63 billion in bonds and sukuk last year.
