Under increasing pressure to reduce production, OPEC may see oil prices continue declining in the months ahead.
Declining oil prices have caused shares in Saudi Arabia to dip for a fourth day over concerns about the profits of OPEC’s biggest producer.
The Tadawul All Share Index dropped 1.3 percent to 9,553.81, the lowest this month, according to Bloomberg. One of the biggest petrochemicals producers in the world, Saudi Basic Industries Corp. (SABIC), dropped 1.6 percent, and the Al Rajhi Bank dropped 1.7 percent.
Meanwhile, Qatar’s shares posted gains of 0.1 percent to 13,744.80.
Under increasing pressure to reduce production, OPEC may see oil prices continue declining in the months ahead. A benchmark grade for half the crude in the world, Brent, drooped for the eighth week in a row, down 4.8 percent to $76.76 per barrel. That marks a four-year low that comes well below the $99.2 per barrel Saudi Arabia needs to balance the budget.
The Saudi government has attempted to assure investors that it doesn’t need more expensive oil, but the drop in the equities market continues to suggest that investors aren’t so sure, and are placing bets against the Saudi economy and its budget.
Meanwhile, news that FIFA had reinforced its intentions to allow Qatar to host a World Cup in 2022 despite allegations of corruption boosted stocks in the Gulf nation. Qatar has allocated $200 billion to constructing stadiums and other infrastructure to handle the huge crowds that will swarm on the tiny nation. The construction plans even involve building a brand new city.
The announcement by FIFA encouraged investors because it means that money will not definitely be spent, and the project won’t be suddenly yanked away from them, encouraging medium and long-term investments in Qatari stocks.
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