Rising crude prices augur well for deficit

MUSCAT, March 9 - The steady rise in the prices of Oman crude augurs well for the fiscal reform measures being followed in the country. While the official selling price for Oman crude oil for May delivery settled at $66.53 per barrel at the Dubai Mercantile Exchange (DME), the average price increased by 9 per cent at the end of January this year.

Healthy movement

This is $66.3 per barrel against $60.8 per barrel by the end of January 2018, data from National Centre for Statistics and Information (NCSI) shows. According to analysts, futures trading of crude oil prices witnessed a healthier trading movement since January 2019 for most major crude oil benchmarks around the world. The higher prices, they say, resulted from many factors including new production-cut agreement by Opec and its non-Opec allies that came into effect in January 2019. According to a DME statement, the average price of Oman oil March delivery 2019 has stabilised at $66.65, which is $2.03 per barrel higher than February delivery 2019.

“Any price above $58 will have a positive impact on the budget. The present price is good for the general finance of the country”, said an anlayst.

On the last day trading on Thursday, the crude prices rose 74 cents from the previous closing of $65.79 per barrel. NCSI figures show that the Sultanate’s total exports of crude oil and condensates by the end of January 2019 amounted to 23,321,000 barrels. This is 7 per cent less than 25,064,500 barrel production in January 2018.

Budget deficit

At the same time, on the back of rising oil and gas revenues, the budget deficit from January to November last year dropped to RO 1.878 billion. Net oil revenue during the 11-month period from January to November jumped 45 per cent to reach RO 5.88 billion against RO 4.05 billion during the same period in 2017. The expenditure for oil production witnessed a rise of 6.9 per cent during the period to reach RO 733.2 million against RO 685.9 million during the corresponding period. While gas revenues increased to RO 1.97 billion, showing a 33.7 per cent rise, its production cost fell by 1.3 per cent at RO 550.6 million.