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Oil price may drop further, least effects on Kuwait, S. Arabia

Report by Abdulwahab Al-Guyed

VIENNA, Oct 19 (KUNA) -- Glut prevailing on the global oil market resulted in prices' slump of OPEC's 12-crude basket to approximately USD 96 per barrel starting early last month.
The crudes of the Organization of Petroleum Exporting Countries continued plunging, this month, reaching USD 81 pb, compared to USD 117 pb during the same period of time last year.
Traders forecast continuing fall of the crude prices, as long as the excessive supplies continue to swamp the market. While consumers, namely Western nation, have applauded the drastic fall, producers, particularly OPEC member states as well as Russia and Saudi Arabia, economies of which largely depend on oil proceeds, have voiced serious worries.
Latest figures showed that the oil price, on Thursday, dropped to USD 83.02 pb, some euro 65 pb. Price of the West Texas crude reached USD 80.38 pb, in contrast to USD 101 pb, recorded weeks ago.
Rapid and record slump of the oil prices is largely attributed to robust rate of the US dollar, over-supplies, hike of shale oil's output in the US and lack of OPEC's measures to trim the production -- as the cartel had frequently done in the past.
According to OPEC's report last October, the cartel predicted a 1.2 percent increase of global demand for the OPEC crudes in 2015, at 92.4 million barrels per day, industrial nations' demand at 45.7 million bpd, with bulk of the forecast rise from China, 300,000 bpd, and the rest from the developing countries, particularly the Asian nations.
The same report had expected fall of demand for the OPEC crude, from 30.3 million bpd in 2014 to 29.2 million bpd in 2015, by some 1.1 million bpd.
Meanwhile, Iran is apparently stockpiling on extra reserves, while the 2014 statistics indicating noticeable increase of its sales to China and India.
In view of projections by consultancy houses that the global demand will fall by 750,000 bpd, analysts forecast further drop of the price to USD 75 pb, a level viewed positively by the International Energy Agency's experts who believe that such a price will create market balance, thus boosting the international economy.
OPEC is currently facing the crucial question; how to deal with this record prices' slump, by possibility slashing member states' production quotas and ceiling, currently in the range of 30.2 million bpd.
According to the Vienna Institute for Comparative Economic Studies (WIIW), Russia, whose oil proceeds constitute more than two thirds of its financial income, will take the brunt of the damage caused by the oil prices' drastic fall.
Russia had worked out its budget, on basis of projected oil price at USD 104 pb.
The Russian Gasprom Company said, in a report released on Friday, that the oil price would continue dropping to reach USD 70 pb -- that is also of prior concern for Moscow currently suffering from European sanctions due to its involvement in Ukraine.
The Vienna Institute for International Economic Studies (WIIW), a non-profit organization, predicts economic recession in Russia in case the oil prices continued the bearish trend. And experts at the institute believe Kuwait and Saudi Arabia "will sustain the least damage," among the producers, and that the other oil-rich nations namely Iran and Venezuela will have to cope with the most serious repercussions. (end) amg.rk