The Oman and Bahrain banking systems are the most vulnerable sectors in the GCC to the fall in oil price, a recent report has found.
Over-reliance on oil revenue and high break-even prices ($103/bl and $127/bl respectively) are the main reasons behind the trend, the report added.
“Although Oman’s government finances are healthy, it remains an undiversified economy and public spending represents
around 48% of GDP for 2014.
“Bahrain’s external position is stronger and the economy is more diversified, but the banks are already operating in an economic environment weakened by ongoing domestic tensions and increased regional competition,” it said.
Meanwhile, Saudi Arabia and UAE banks are also likely to be affected due to their relatively high break-even oil prices ($106/bl and $77/bl).
However, the impact will not be as dramatic thanks to their large reserves and larger non-oil sectors.Â
The Kuwait and Qatar banking systems are likely to be least immediately impacted given their sovereign’s very low fiscal break-even oil prices ($54/bl and $60/bl respectively for 2015), the report concluded.Â
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