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Crude oil industry in the GCC - statistics & facts

As of 2020, around a third of the world’s oil was produced in the Middle Eastern region. Northern America in comparison produces only 23.8 percent of the total global volume of oil. The leading oil producers amongst the Middle Eastern countries are the Gulf Cooperation Council (GCC) members. Oil reserves were discovered on the Arabian Peninsula in the 1930s, and revenue from them led to increased economic prosperity and development for the GCC member states throughout the 20th century. Therefore, the core GCC states of Saudi Arabia, the United Arab Emirates, Kuwait and Qatar are referred to as rentier states, which means most of their revenue comes from fossil fuels, instead of taxation. This has led to distortion of those countries’ labor markets, as the workforce participation rate of their native populations is very low, and the majority of their workforces consist of expatriates.

Amongst the GCC states, Saudi Arabia leads in terms of oil production. Saudi Arabia is considered a crude oil swing producer because it can increase or decrease its oil production output without significantly increasing production cost. As of 2018, Saudi Arabia was the leading crude oil supplier worldwide, with an export value of over 183 billion U.S. dollars. Saudi Arabia’s breakeven oil price per barrel was less than half of its main global competitors, Russia and Venezuela.

The leading oil company worldwide, in terms of daily production volume, is the state-owned enterprise Saudi Aramco. Despite its competitive standing on the global market, the Saudi Arabian government decided in late 2019 to publicly trade about three percent of the company in order to use the revenue to diversify its economy from crude oil. Saudi Aramco’s total asset values are worth around 510.5 billion U.S. dollars, making it one of the world’s most valuable companies.

The current coronavirus (Covid-2019) pandemic has caused a strong decline of the global fossil fuel demand. OPEC projected a decline by 6.9 billion barrels per day for 2020. Saudi Aramco revised its capital expenditure due to the crisis from 35 billion U.S. dollars to 25 billion U.S. dollars for this year. This only underlines the volatility of the global oil market.
This instability of oil prices in recent years encouraged the other GCC member states to accelerate the process of economic diversification in order to decrease their dependence on fossil fuel and increase their global competitiveness in the future.

The United Arab Emirates has thus far been the most successful GCC member state to shift its revenue away from dependence on fossil fuels, having established itself as a tourist destination and a financial hub for the Middle East.
Qatar has diversified from crude oil and as of 2017 is the largest natural gas exporter in the world.

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