Record oil earnings in 2012 have provided the impetus for most Gulf oil-exporting economies to plan for further expansion in their spending plans for this year. The Opec Basket price, representing the oil exports for the 12-country bloc, averaged three figures for the second year running, hitting $109.45 a barrel, compared with $107.46 in 2011.
Forecasts for 2013 put Brent crude at around $110 a barrel, the same as the average price over the past 18 months.
Global oil prices in 2012 were supported by instability in the Middle East and production issues in the North Sea, with falling exports from Iran also constraining supply and helping inflate prices. Saudi Arabia, Iraq, Kuwait and the UAE are all expected to report record oil revenues for the year.
Saudi Arabia earned $291bn in the first
11 months of 2012, according to the US’ Energy Information Administration (EIA). On the back of this, the kingdom is planning to spend $220bn in 2013, an increase of almost 20 per cent on the budget for last year.
The Saudi government should maintain a fiscal surplus in 2013, albeit a smaller one on the country’s forecast of lower crude revenues and higher spending. According to the UK’s HSBC, flat oil revenues in 2013 would generate a budget surplus of $65bn next year – about $40bn down on last year. Even Dubai is increasing spending as confidence rises across the oil exporting GCC.
In contrast, Iran is preparing its budget for 2013 to lessen dependence on oil revenues. Earlier this year, the head of the budget commission in the Iranian parliament said it was looking at a 1 million-barrel-a-day (b/d) drop in oil income for 2013 – equivalent to $40bn. It shows that not all-exporters are planning another year of bumper spending.