Global credit rating agency Fitch Ratings has warned that fluctuations in oil prices will have significant yet varied effects on the public finances of Gulf Cooperation Council (GCC) countries, influencing their budget outcomes, debt levels, and credit ratings.
In its latest report, Fitch analyzed multiple oil price scenarios and their fiscal implications for the region. It concluded that if Brent crude oil averages $65 per barrel in 2025, most Gulf states — including Kuwait — could achieve budget surpluses, reports Al-Rai daily.
However, Saudi Arabia (A+/Stable), Bahrain (B+/Negative), and Oman (BB+/Positive) are still expected to post budget deficits, even at that price point.
By contrast, a sharper drop in oil prices — down to $45 per barrel — would push all GCC countries into fiscal deficits, assuming no major changes in spending or revenue policies.
Fitch highlighted the delicate balancing act faced by Gulf states: reducing vulnerability to oil price shocks through spending discipline, while also investing in economic diversification and social programs. Complicating matters further is the reality that much of the Gulf’s non-oil economic activity still depends heavily on government spending, which in turn is tied to oil revenues.
The report emphasized that the policy choices of each government will ultimately determine the scale of the financial impact. Compared to previous downturns, GCC governments now have more tools for revenue generation and greater flexibility to adjust spending.
While prior oil price collapses intensified economic strain due to rigid cuts, recent structural reforms across the Gulf have started to bear fruit — supporting growth in non-oil sectors. However, a sustained oil price drop could still test the resilience of these improvements.
