Economies of the Middle East region, which rely heavily on oil, will be severely affected if oil prices do not bounce back in the short term. With the impact of the historic market crash echoing across the region, countries are struggling to offset losses from a key source of national income. Some nations like Saudi Arabia, the United Arab Emirates (UAE) and Kuwait are relying on foreign currency reserves while anticipating higher oil prices to sustain government spending and social programs. However, countries like Iraq face the added threat of possible social unrest if oil prices remain at current levels, according to a recent Forbes report. The country is planning “painful cuts in social benefits relied on by millions of government workers,” the report stated.
Several E&P projects also have been put on hold. According to GlobalData, the low-price environment will put E&P projects due to take final investment decision in 2020 at an elevated risk of deferral as governments are introducing cost-cutting measures. Several projects are already facing operational interruptions and delays, albeit varying in severity
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