Roundup: Oil prices tumble no cause for concern about Kuwait's economy: oil experts

KUWAIT CITY, July 6 (Xinhua) -- There is no immediate concern for the economy of Kuwait after oil prices in the global market took a nosedive this week, oil analysts in the country said.

As mounting concerns about a worldwide recession outweighed supply issues, oil prices plummeted on Wednesday, extending Tuesday's heavy losses.

Brent crude futures fell 1.33 dollars, or 1.2 percent, to 101.44 dollars a barrel for the second day in a row, while West Texas Intermediate crude fell 1.80 dollars, or 1.81 percent, to 97.70 dollars, registering a price below 100 dollars for the second day in a row.

The tumble in oil prices has raised concerns in Kuwait, where the petroleum industry accounts for more than half of its gross domestic production and oil earnings make up 90 percent of the state budget.

But most analysts and economists in Kuwait remain optimistic about oil prices and the kingdom's economy.

Khaled Booda, an oil expert, told Xinhua that the price of crude oil is unlikely to fall further given the high demand for energy in general and oil in particular.

Boodai said a temporary setback in oil prices is expected, but the general trend on the global stage still points to robust demand for oil, and as a result, the price of oil will stabilize at a relatively high level.

Abdul-Samee Behbehani, an analyst on oil strategy, echoed Boodai's remarks by saying the tumble in prices is acceptable because the oil price is still around the 100-dollar threshold.

He noted a surplus in Kuwait's budget even at the current price, saying the surplus will reach 35 percent of the country's budget at the end of 2022.

Kamel Al-Harami, an independent Kuwaiti oil analyst, told Xinhua that Kuwait is used to the fluctuations in oil prices.

"In the worst-case scenario, Kuwait can borrow money from the outside or from the Future Generations Fund, which has risen to about 700 billion dollars," Al-Harami said. The Future Generations Fund is a national savings pot designed to help Kuwaitis prepare for life after oil.

"Kuwait and all producing countries are in a comfortable position so far, even if oil prices fall deeply. Even with a recession, how deep is it going? I don't see it going much lower than 100 dollars," Al-Harami said.

"The break-even price in Kuwait's current budget is 75 dollars a barrel, which is a very high price compared to the levels of oil prices in the last 10 years," said Abdulaziz Al-Anjeri, founder and CEO of Reconnaissance Research.

However, if the oil price falls below 75 dollars a barrel, it will "inevitably and negatively" affect the kingdom's economy, he noted.