Crude oil prices have remained above the US $90 per barrel mark despite a small decrease due to signs of a slowing down of the Chinese manufacturing sections.
Oil prices last hit the $100 mark in October 2008, after reaching an all-time high of $147 in the summer of that year.
Since then, prices have crashed, falling as low as $40 a barrel, and then recovered. Prices have kept with a $70 to $90 range for most of 2010.
With lower than average temperatures in Europe and the US, leading to an increased demand for oil, prices are expected to remain above the $90 level at least in the short to medium term.
December 30, 2010
Analysis and Forecast: Decreasing Risk
All GCC states and Yemen rely heavily on proceeds of oil to fund their development and run the economy. In recent years, GCC states have embarked on diversification efforts to make their economies less reliant on oil. However, the diversification plans are still being implemented and the economies of those states still invariably rely on oil.
The break-even price for oil has risen in past years, and during the earlier parts of 2010, the price of oil was below the break-even part. This has led to concerns about the ability of some of them to see through the diversification plans. The increase in the price of oil well above the breakeven price of oil for all the GCC states will increase income, provide greater liquidity and enable the implementation of diversification plans.
Below is a figure showing the estimated breakeven price for oil for GCC states: