Softening oil prices will force adjustments in the Middle East

With a lower oil-price outlook, project economics will need careful consideration. Securing project finance may also become more difficult. And government spending will, no doubt, need to be curbed. James Gavin reports from Bahrain

As oil prices soften, the world’s biggest producers may need to tighten their belts – and investors to adjust their outlook. Across the Middle East and North Africa (Mena) governments now face oil prices trading below government budgeted break-even points for 2012. Even Saudi Arabia, the world’s leading exporter and the chief sponsor of the retreat in oil markets, now depends on crude fetching about $80 a barrel to keep its budget in the black. Abu Dhabi’s break-even price is greater still: at $107/b, according to United Arab Emirates’ bank Emirates NBD, it is the highest in the Gulf. It is a growing worry. Roberto Sieber, chief economist at Hess Energy Trading, reckons Middle Eastern produc