The price of oil has continued to rise and will help to improve balance sheets in the Gulf, Trend reports with reference to the UK-based Capital Economics research and consulting company.
The company believes that with oil prices at $75pb, all Gulf economies with the exceptions of Bahrain and Oman are likely to be running current account surpluses, having run deficits in 2020.
“Budget deficits will have narrowed too and this may open the door to looser fiscal policy. Indeed, there have been signs recently that policymakers in Kuwait, Oman and Saudi Arabia are moving in this direction. However, we expect that the price of oil will fall later in the year, meaning that the window to raise spending may be limited,” said the company.
The U.S. Energy Information Administration lifted its forecasts for this year's U.S. and global benchmark oil prices, according to a monthly report. The EIA forecast this year's West Texas Intermediate crude prices at an average $61.85 a barrel, up 5 percent from the May forecast. Brent crude is expected to average $65.19 this year, up 4.7 percent from the previous forecasts. The EIA, however, lowered its oil forecasts for 2022 by 0.4 percent to $56.74 for WTI and to $60.49 for Brent.
BofA Global Research says that tighter oil supply and demand balances in 2022 could push oil briefly to $100 per barrel.
"We believe that the robust global oil demand recovery will outpace supply growth over the next 18 months, further draining inventories and setting the stage for higher oil prices," the bank said.
The bank raised its Brent crude oil price forecast to $68 per barrel from $63 earlier. In 2022, it expects Brent to average $75 per barrel versus its earlier estimate of $60.