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US President Donald Trump, along with Mohammed bin Salman, Prince of Saudi Arabia, at the beginning of the group on June 20, 2019.
Bernd von Yutichenko | Drawing alliance Gets the image
Dubai, United Arab Emirates – Wealthy Gulf States are in a better position than in many other regions of the world to manage US President Donald Trump tariffs, economists and regional investors believe. But a shaky forecast for oil pricing may be at risk of the budget of some countries.
Saudi Arabia, United Arab Emirates, Bahrain, Kuwait, Oman and Qatar make up the Gulf Cooperation Council. According to the Secretary General of the GCC Jasem Albudaiwi, they amounted to about 3.2 trillion in sovereign financial assets, which is 33% of total sovereign assets worldwide.
The GCC also has approximately 32.6% of the world -tested crude oil reserves, reports the Persian Gulf Cooperation Council.
This makes it both the Trump administration’s asset and for the vulnerable policy, as Trump has long pushed to OPEC, an oil manufacturer led by Saudi Arabia to pump more oil to help reduce oil prices and offset inflation in the US
However, the lower price of oil can significantly affect the budget deficit and expenses for those countries whose economies – despite diversification efforts – are still largely based on hydrocarbons.
Useful relationships with Trump
Ben Powell, the BlackRock Chief Investment Strategist in the Asia-Pacific region and the Middle East, which is located in Abu Dhabi, said the warm relationship between Trump is strengthening their hand when it comes to potential tariff talks. Some GCC countries have also expanded its role in global diplomacy. One example Candying of peace talks Riyadh to end the war of Russia-Ukraine, What has done it is increasingly important for Washington.
“I think the Middle East with a deep relationship with the US they have should go out normally,” Powell CNBC said “Access to the Middle East“Monday.
“I think we will all intervene in the whirlpool for the next short period of time. It is inevitable. But the Middle East, with the power of the balance they have, with the help of the energy they still have, providing funding on the nearest basis … for me, in the Middle East – maybe not today, but over time, it must be a relative winner. said.
Given that it may not be rumored, Monica Malik, the chief economist of the Abu -Dabi commercial bank, noted that the US is not the main export market for the Gulf.
“GCC should be in a relatively favorable position to withstand the wind, especially the UAE,” she wrote in the bank on Friday.
While the region faces a blanket of 10% universal tariff, as well as previously imposed tariffs on all foreign steel and aluminum – products that UAE and Bahrain both exports – “We expect direct impact to be retained, since the US is not a key place for export of the GUCC in total. Year, ”she said.
The threat of spending plans
But the forecast for oil prices is crucial for the budgets and expenses in the Gulf of Persian, especially for Saudi Arabia, which has started trillion dollars of ambitious megap projects within the framework of the 2030 vision, Prince Prince Mohammed Bin Salman to diversify the economy of the kingdom. The success of the plan, perhaps ironically, largely relies on oil income.
Global benchmark Bronwed raw He traded $ 61.44 a barrel on Wednesday at 8:30 am in London, falling by almost 17% a year. Additional pressure was rendered at the price after OPEC+, the oil producer led by Saudi Arabia and Russia, made Unexpected Further strengthening of global nutrition.
Saudi Arabia needs oil from more than $ 90 a barrel to balance its budget, according to the International Monetary Fund. This week, Goldman Sachs lowered the oil price forecast for 2026 to $ 58 for Brent and $ 55 for the US Benchmark WTI. This is a significant step below the forecast only last Friday at $ 62 for Brent and $ 59 per 2026.
“The weaker world demand and greater supply adds the risk of lowering our Brent forecast by 2025, although we are expecting greater market clarity before making any changes,” Malik ADCB CNBC said on Monday. OPEC+ is designed to increase oil production in May, and it predicts that the group will complete this plan if the raw prices remain where they are or fall.
“Our greatest concern will be a sharp and sustainable drop in oil prices, which will require reassessment of expenses – the government and the budget, including Capex, as well as potentially affect the liquidity of the banking sector and wider confidence,” Malik warned.
