Kuwait-Mubasher: Oil prices are now at their lowest level in a decade, if we exclude the global financial crisis, roughly 50% below last year’s peak of $115, according to a recent report published by Asian Investments.

Oil-exporting countries are facing challenges as the cost of producing a barrel of oil diverges significantly between countries.

According to Morgan Stanley, extracting oil from sands is even more expensive, with an average price of $70 and $75 per barrel respectively, while the average cost of onshore in Gulf countries is only $27 per barrel.

Growth in Middle East oil-exporters remains strongly linked to oil prices, the report noted, adding that oil exports represent the main source of revenue. The current period of weakness pushed down price levels below most countries’ fiscal breakeven prices, the level needed to generate a fiscal surplus.

Kuwait is the only country in MENA that can still generate a fiscal surplus with current oil prices as it posts a breakeven price of $50 for 2015, as estimated by the International Monetary Fund (IMF), Asian Investments noted.

Qatar and the UAE’s economies are more diversified than Kuwait’s, but larger fiscal spending resulted in breakeven prices of around $70 per barrel. Saudi Arabia’s breakeven price is around $85 per barrel.

The most vulnerable countries in the region are Bahrain and Oman, whose breakeven prices stand at approximately $100 per barrel. In Bahrain, with a mere 50,000 barrels per day production rate – sixty times smaller than Kuwait’s three million barrels.

In the case of Oman, 75% of its revenue comes from proceeds of 950,000 barrels sold per day.

Low oil prices will increase the pressure on Gulf countries to diversify away from the hydrocarbon sector.