Gulf News reported that the windfall from oil exports in recent months may have given the Gulf Cooperation Council states enough cushion to enable them to carry on with their development projects and investment ventures for months in the likely event of another recession hitting the global economy.
Experts said that International oil prices have surged nearly USD 40 per barrel in the last 6 months due to the West's tensions with Iran over its controversial nuclear program and supply concerns, given the unrest in several oil exporting countries in the Middle East.
Brent crude traded a tad below USD 125 per barrel and crude on the New York Mercantile Exchange was trading at around USD 109 per barrel. Coming out of the global financial crisis these price levels are considered too high for oil importing countries some of which risk slipping back into recession largely due to the strain of high cost of crude imports.
Mr Mohammad Amerah an Abu Dhabi based economist said that "The high oil prices have helped increase the foreign currency reserves of GCC countries and provided them a cushion against a future drop in oil prices."
Mr Amerah said that "The crude exporting countries know very well that the windfall gains do not last for long. This has happened before and will happen again. The countries may have already planned how they are going to use their surplus from oil revenues. In my view, much of the surplus funds would be deployed in developmental projects and will get invested through their sovereign wealth funds."
Mr Samuel Ciszuk consultant with London based KBC Process Technology Limited said that oil prices are indeed at levels where more and more watchers are seeing a clear danger to the economic recovery of the US and the already very weak economic situation in Europe.
Mr Ciszuk said that even in Asia, there are some disconcerting signs that oil prices might be causing a slowdown. From historic experience at these levels it would be expected that demand destruction is already happening, particularly in the US and Europe.
He said that in the meantime, GCC states are of course, earning record revenues, putting them in a good position to both deliver on increased social spending programs, maintain aggressive economic diversification and industrialization as well as build comfortable reserves which could come in handy should there be a new global economic downturn.
