With oil prices pushing $70 a barrel, the average price of $35 a barrel used by the Kuwaiti government to calculate the 2009-10 budget seems “conservative”, analysts at the bank said in a statement on 5 August.

The country’s benchmark Kuwait Export Crude traded at $69 a barrel on 29 July, after falling as low as $61 a barrel in the first half of the month.

On the basis of three potential scenarios for oil demand and prices - stability, a sharp upturn, or a mild fall in prices - the analysts say oil revenues should reach KD15-16bn this year. If the government continues a recent trend of underspending, analysts say Kuwait could run a surplus of up to KD6bn.

“The government’s caution in boosting its spending plans at least seems likely to ensure that the drop in oil prices in 2008 leaves Kuwait’s financial position unscathed,” say analysts.

Kuwaitran a budget surplus of about KD6bn in 2008.