As the average oil price reached higher than the levels estimated in the 2022 budget and non-oil revenues expected to record further increases this year, the Sultanate of Oman is set to see a surplus in the current year.
The average price of Oman crude for February delivery 2022 has reached $73.14 per barrel oil although it is $7.12 lower than January delivery 2022.
With the current oil prices at a record 11-year high of over $97 a barrel, the average prices are expected to cross the $75/barrel for 2022.
Oman's projected revenue figures in the 2022 budget are based on an assumed oil price of $50 per barrel, up from an expectation of $45 per barrel in the 2021 budget.
According to a new report by Bloomberg, reveals that the rise in crude oil prices above par for almost all Middle Eastern producers increased the possibility of large budget surpluses for even the weakest export if prices remained high.
"The rise in crude oil prices above par for almost all Middle Eastern producers increased the possibility of large budget surpluses for even the weakest export if prices remained high", says the report.
The report prepared on the basis of International Monetary Fund estimates points out that the price of a barrel of oil needed for financial parity in Bahrain is the highest among the Gulf countries, reaching $106, followed by Saudi Arabia at $72, by the UAE at $66, followed by Kuwait at $65, while the price reached Only $44 needed in Qatar.
According to data from Dubai Mercantile Exchange, where Oman crude is traded, Oman crude for April 2022 delivery contract price rose by $4.06 Thursday to reach $97.69 a barrel.
On the international market, oil prices jumped, with Brent rising above $105 a barrel for the first time since 2014, after Russia's attack on Ukraine exacerbated concerns about disruptions to the global energy supply.
"The projected average oil price seems to be on a conservative basis considering that the current oil prices are relatively higher. Oman's fiscal breakeven oil price needed to balance its 2022 budget will be $67 per barrel, compared with $74 per barrel in 2021", points out an analysis by PWC Middle East.
According to the International Monetary Fund forecast, the price of a barrel of oil needed for the financial parity of the Sultanate of Oman in the current year's budget is $60 per barrel.
The uptick in expected oil and gas revenues come as a result of both higher oil prices and higher oil production, in line with the OPEC-called production restraint deal.
"The Sultanate of Oman has seen its production ramp up in a stepwise manner since the middle of 2021 as the OPEC+ group gradually restores all the oil it took off the market in May 2020 in response to the Covid-19-induced collapse in global oil demand", the PWC report points out.
The projected lower debt to GDP ratio of 64 per cent for 2022 versus 67 per cent in 2021, including the recovery of oil prices and narrowing of the budget deficit from previous years, has led to Fitch revising the outlook to stable while affirming the rating at BB- in December 2021.
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