Saudi budget based on $45 oil price ‘ideal’

Updated 27 November 2014

Saudi budget based on $45 oil price ‘ideal’

Saudi economists expect oil prices to decline further in the coming years if producing countries inside and outside the OPEC fail to reach an agreement to stop the downward trend.
They have also advised the government to peg the oil price between $45 and $50 while preparing the national budget for 2015.
“The Organization of Petroleum Exporting Countries alone cannot determine market prices now because it controls only 40 percent of the market and there are several players with conflicting interests,” Ehsan Buhulaiga, a prominent economist, told Arab News.
He emphasized that the budget would not be affected as long as the price stays above $85 per barrel, adding that the country’s huge reserves would offset the budget. “The lack of solidarity and vision has weakened the OPEC,” he observed.
OPEC ministers are expected to reach a consensus during their meeting in Vienna on Thursday. Petroleum and Mineral Resources Minister Ali Al-Naimi believes the market would stabilize itself.
Meanwhile, Saudi Arabia has failed to reach an agreement with Russia, Mexico and Venezuela to cut output.
Buhulaiga said the market is now determined by demand and supply. Producers are competing with one another, creating an over supply that has brought down crude prices by 32 percent since June.
Mohammed Salim Sabban, an oil expert and a former economic adviser to the minister of petroleum and mineral resources, predicted oil prices would continue to dip, despite OPEC’s efforts to stabilize market.
He also stated that oil prices would never cross $100 again. “It will be a thing of the past.”
Sabban said there was nothing surprising in the price plunge for those who follow international market developments as they see some countries adopting policies to reduce consumption. “Depression in Europe, China and some developing countries has brought down the demand for oil,” he pointed out.
He said efforts to push prices above $100 had two negative results. It encouraged consumers to think of alternative energy resources and producers to increase output. US shale oil output has reached 3.5 million barrels. Shale oil would remain in the market even if prices hit at $60, he said.


Oman said to mull new regional airline

Updated 22 October 2019

Oman said to mull new regional airline

DUBAI: Oman is considering setting up a new regional airline that could take over domestic operations from state carrier Oman Air, two sources familiar with the matter told Reuters.

A request for proposal was issued this month by state entity Oman Aviation Group for a feasibility study into operating the new airline, “Oman Link,” the sources said.

Setting up a new airline for domestic flights would allow Oman Air to focus on its international network where it competes with large Gulf carriers Emirates, Qatar Airways, and Etihad Airways.

The new airline could partner with Oman Air with both carriers connecting passengers to each other but would have its own independent management, the sources said on the condition of anonymity because the details are private.

Proposals are to be submitted by Nov. 11, one of the sources said.

The new airline would use regional jets for domestic flights and potentially later to other cities in the region where there is not enough demand to fill the larger single aisle jets used by other airlines in Oman.

FASTFACT

Oman Air operates flights to four airports in the country, including the main Muscat International.

Oman Aviation Group and its unit Oman Air did not respond to separate emailed requests for comment.

Oman Air operates flights to four airports in the country, including the main Muscat International, according to its website.

The airline uses 166-seat Boeing 737 jets and 71-seat Embraer E175 aircraft on domestic and regional flights.

Both aircraft types are too costly to consistently operate domestic routes at a profit, according to industry sources.

Oman has been restructuring its aviation sector in recent years. Oman Aviation Group was formed in 2018 and includes Oman Air, Oman Airports and Oman Aviation Services.

A budget, second airline, Salam Air, was launched in 2017. It is owned by Omani government pension funds and the Muscat municipality.

Last week, Eithad and Air Arabia said they were jointly setting up a low cost carrier in Abu Dhabi.