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Coronavirus Pandemic and Low Oil Prices Putting Pressure on the Gulf Countries

Author

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  • Dawud Ansari
  • Hella Engerer

Abstract

The coronavirus pandemic has affected the Gulf countries in a particular way. In addition to the direct consequences of the pandemic, the spread of the coronavirus has led to a collapse in demand for the Gulf countries’ most important source of revenue: oil. Its price, which had fallen initially due to the price war between Saudi Arabia and Russia, collapsed in spring 2020. Although it recovered somewhat afterwards, no rebound is in sight. Market simulations by DIW Berlin that analyze the future price development demonstrate there is a clear risk of the downward trend continuing in the short term. As a result, export revenue is likely to further decline in the Gulf states. The countries’ fiscal space will shrink due to pandemic-related additional expenses as well. Generally, long-term challenges faced by this region, such as diversification and the possibility of a global energy transition, are at the risk of not being properly addressed

Suggested Citation

  • Dawud Ansari & Hella Engerer, 2020. "Coronavirus Pandemic and Low Oil Prices Putting Pressure on the Gulf Countries," DIW Weekly Report, DIW Berlin, German Institute for Economic Research, vol. 10(46/47/48), pages 447-454.
    • Handle: RePEc:diw:diwdwr:dwr10-46-1
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    File URL: https://www.diw.de/documents/publikationen/73/diw_01.c.805660.de/dwr-20-46-1.pdf
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    Cited by:

    1. Altenburg, Tilman & Brandi, Clara & Pegels, Anna & Stamm, Andreas & Vrolijk, Kasper & Zintl, Tina, 2021. "Does COVID-19 change the long-term prospects of latecomer industrialisation?," IDOS Discussion Papers 32/2021, German Institute of Development and Sustainability (IDOS).

    More about this item

    Keywords

    oil price; GCC; Covid-19; diversification; Saudi Arabia;
    All these keywords.

    JEL classification:

    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other
    • N15 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Asia including Middle East
    • N55 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Asia including Middle East
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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