Oil prices in the international market are going through waves of rise and waves of decline, but the time periods are different between rise and fall, and perhaps the period from 2003 to 2013 was the best in terms of the continuation of the rise, which enabled the Arab oil countries to pay their debts, and the formation of large balances of foreign exchange, as well as For financial momentum with its sovereign funds.

But the period from mid-2014 to mid-2021 was difficult for the Arab oil economies, as the situation changed to a deficit in the budgets of those countries, and they were forced to withdraw from their foreign exchange balances, as well as to borrow from the domestic and foreign markets.

These matters made the International Monetary Fund expect in February 2020 the financial wealth of the Gulf countries to dry up within 15 years, if the financial systems continued as they were at that time, which indicates the consequences of the decline in oil prices on the Arab countries during the last period, what I went to Kamco Invest said that the Gulf countries "governments and companies" are required to pay the value of bonds and sukuk about $321.4 billion during the period 2021-2025, of which $157.1 billion is owed by governments, and about $164.3 billion is owed by companies.

But the situation after the first ten of October 2021 has changed, as oil prices in the international market are witnessing a significant boom, and oil prices have exceeded the ceiling of $80 a barrel, and there are expectations that these prices will continue during the remainder of 2021, and will rise to $90 per barrel of oil. during 2022.

Undoubtedly, expectations are confusing, despite their positives. Since June 2021, oil prices have been constantly increasing, but the ambition of many did not exceed $75 per barrel of oil. However, in light of the previous experiences of Arab oil countries, they enjoyed price savings that led to savings of cash. The question arises: How do you benefit from this time in a way that prevents it from being subjected to harsh experiences in the event that the rise in oil prices turns into a decline?

And how did it change its financial and economic situation to be immune to the fluctuations of the international market?

The demand for oil in the global market will recover during the coming period, at least during 2022 and 2023 (Reuters)

The importance of Arab oil

Arab oil still represents a strategic importance at the global level in terms of supplies, as well as at the level of the Arab oil economies themselves. According to the data of the Unified Arab Economic Report for the year 2020, the Arab oil countries own 56.5% of the proven reserves of oil in the world, as well as 26.7 % of the world's natural gas reserves.

As for production, the Arab oil-producing countries provided 28.4% of the world's oil production, and about 14.9% of global gas production.

price jumps

On Monday, October 11, 2021, oil prices in the international market crossed the $80 barrier, as the price of Brent crude reached $83.2 per barrel, and the price of US crude reached $80.50 per barrel.

In light of comparing those prices with what they were in January 2021, we find that there is a big difference, as Brent crude was around $55 a barrel, meaning that in October its price increased by about $28.2, and this increase is 51.2 percent compared to two months.

As for US crude, it amounted in January 2021 to about $52.4 a barrel, and in the current October its price increased by about $28.1, and this increase amounts to 53.6% compared to the two months.

But if we take into account the scenario of the price of a barrel of oil rising to $90 a barrel, the rate of increase will undoubtedly be different, bearing in mind that this scenario is unlikely to occur in 2021, but is expected to be achieved in 2022.

Thus, if we compare the prices of January 2021 at $55 for Brent crude and $52.4 for American crude, the rise in prices to $90 means an increase of about $35 for Brent crude, and about $37.6 for American crude, and the percentage increase will be, respectively. 63.6% and 71.7%.

We must take the average increase into account so that the calculations reflect the reality, since the prices reached in October this year more than 80 dollars, we should be aware that it was in January of last year around 55 dollars, and therefore the expected average will be in In light of the data published in the monthly oil market reports issued by the Organization of Petroleum Exporting Countries (OPEC) for the period from January to September 2021, at $66.2 per barrel.

That is why we found Standard and Poor's agency that expects the deficit in Gulf budgets to decrease in 2021 to $80 billion, compared to $143 billion in 2020.

This means that the financial crisis of the Arab countries will not be greatly relieved unless prices continue above $ 80 a barrel for a long time until the end of 2025, so that the Arab countries can reform their financial situation, as well as create surpluses through which development or investment plans can be implemented in the right direction.

Opportunity available

All expectations indicate that the demand for oil in the global market will rebound during the coming period, at least during 2022 and 2023, which represents an opportunity for the Arab oil countries to benefit from the rise in prices above the $ 80 barrier per barrel, and expectations of it reaching $ 90 per barrel.

The opportunity is represented in the short and medium terms in several forms, including the disposal of short and medium-term foreign and domestic debts, to make the fiscal policy maker an opportunity to plan important strategies, such as diversifying the Arab oil economies.

As well as returning to the accumulation of foreign exchange reserve balances, as well as supporting the accounts of sovereign funds, but this time the investment policy of cash reserves or the balances of sovereign funds should be reconsidered, in order to stay away from speculation in the money markets, real estate or tourism activities, it must be The Arab oil countries have real investments in the field of technology, whether within each country, or in the form of an Arab bloc, that can achieve a high added value for these countries, and at the same time secure returns for them that protect them from the fluctuations of the international market.

potential threats

The scenario of high oil prices is strongly expressed by the current reality, but the international market is shrouded in a state of ambiguity about the two largest economies in the world, namely America and China, especially China, which suffers from a supply crisis in raw materials, especially energy, which will affect production in China and international exports. Moreover, America is experiencing a real crisis in the issue of its public debt, which has greatly worsened, exceeded its domestic product, and is making great efforts to revive the American economy.

The possible threat to stop the optimism scenario and the continued rise in oil prices in the international market is the aggravation of the China crisis and the entry of the world into a global economic crisis, a scenario that is not excluded in light of the crisis of the largest real estate company in China, which has debts of 300 billion dollars, and is highly prone to bankruptcy. Which calls for the gloomy shadows of the global financial crisis of 2008, which sprang from America and had bad effects on all economies of the world.

And if this threat occurs and a global crisis befalls, or even the crisis is confined to the level of China, it will negatively affect the demand for oil, and consequently the return of its low prices in the international market, and the continuation of the Arab oil economies in the grip of their financial crisis.