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Middle East Oil Producers Set For $165B Current Account Surpluses

This year’s oil price rally will help Middle Eastern oil producers book current account surpluses of $165 billion in 2021, compared to current account deficits of $6 billion in 2020, the Institute of International Finance (IIF) said in a new report cited by Reuters.

According to the IIF, the oil producing and exporting countries in the Middle East and North Africa (MENA) region will also book $138 billion in current account surpluses in 2022, based on an oil price forecast of $66 per barrel Brent next year. For this year, the current account surplus estimate is based on an oil price outlook of $71 per barrel Brent.

The MENA region “has weathered the economic storm from the health crisis,” the IIF says, adding that higher energy prices are expected to improve the fiscal and current account positions in oil-exporting countries.

Oil importers, on the other hand, will continue to find themselves with high deficits, government debts, and unemployment rates, the IIF said in the report.

“While the economic recovery continues to gain momentum, a split in macroeconomic prospects has emerged within the region ... the divergence in economic performance between oil-exporting and oil-importing countries has widened further,” the institute noted in the report, as carried by Reuters.

The public foreign assets of the oil exporters in the Gulf are set to exceed $3 trillion by the end of 2022, including foreign reserves and reserves at the oil producers’ sovereign wealth funds, the IIF said.

The rebound in oil demand and oil prices has been a boon to Middle Eastern oil producers this year, after a difficult 2020 when prices collapsed amid crashing demand.

For example, oil revenues at the world’s top oil exporter, Saudi Arabia, are flowing in at the highest rate in three years, thanks to the strong price recovery since the start of this year. Revenues from oil hit $19 billion in July, according to Bloomberg data from last week.

Tsvetana Paraskova for Oilprice.com

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