Oil prices coming down - do we need to worry?

Not really, why should we be worried in Kuwait if oil prices are coming down? There is no reason to be worried. We have plenty of cash. Kuwait has generated enough cash during the last two months from April until the last two weeks of this month to balance any cash shortage for the next coming three months. By that time oil prices will recover its strength and we will back to the same old pattern of excess cash and without any real alternative to invest our cash surpluses. Perhaps the only drawback Kuwait will have is to cater to the huge plenty of 2.4 billion US dollars to pay Dow for cancelling the well known 'K.Dow' deal.

The worrying part about our economy and budget is that no one knows what the balanced oil price for our current budget of KD 22 billion for this fiscal year is. Is it $66 a barrel as per our budget, or $99 or $103 per barrel?

The fact is that even if oil prices come below $90 Kuwait will not be affected, as we can easily cancel any project and delay the same for further coming years.

Our case is unique as we are the only country in the region that has not benefited from the rising of oil prices in the last 10 years. No single project we built has evolved. Our neighboring countries are building refineries, petrochemical plants and other mega projects and Kuwait stands still not moving an inch.

The recent decrease in oil prices has really benefited oil consuming countries by billions of dollars. Europe for instance saved about five to six billion euro between the months March and June. While the US saved around $6-7 billion during the same period. While other Arab oil importers saved lesser amounts of monies, still such savings make other products cheaper. It will help the economy of the rest of the countries. Take US gasoline consumers which are saving more than 40 US cents a gallon. Such savings will go towards consuming other goods and services which may help to slowly move the economy but very cautiously.

We said before and will keep repeating that oil prices will bounce back to the level closer to $100 a barrel. Saudi Arabia, Kuwait and United Arab Emirates (UAE), pushed oil production to the maximum in order to force oil prices to come to reasonable acceptable level that doesn't harm the world economy. Oil prices did come below $90 - a level that not acceptable to the Organization of Petroleum Exporting Countries (OPEC) and its main producers, which may force OPEC to produce less oil, and mainly by Saudi Arabia. During the last few days oil prices did bounce back again and we hope that remains at below $100 level. Our Kuwaiti economy is not moving and remains paralyzed similar to the last 10 years. Our situation has worsened without having any real working government as its "acting" government for some long future time which may last until end of the year. Most likely after new election that might take place in the middle of October.

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