Fitch predicts strong growth for Mena oil producers in 2024

Aramco

Oil exporting countries in the Middle East and North Africa (Mena) region will register stronger growth in 2024, supported by the momentum in non-oil real GDP and stabilising oil production following output cuts in 2023, Fitch Ratings said.

Brent crude oil is expected to average $80 per barrel with robust oil prices likely to support the credit metrics in oil-exporting sovereigns, the ratings agency added.

Despite this, weak global growth next year could prompt further Opec+ cuts if the oil market shifts decisively into surplus. Although the latest deal at the end of November 2023 shows reluctance to bring output much lower.

• Market confusion over Opec+ cuts hits oil prices
• Opec+ cuts leave oil markets dazed and confused
• Oil’s inverse correlation to the dollar could return

On November 30, Opec+ decided to decrease oil supplies by 2.2 million barrels per day (bpd).

Saudi Arabia will reduce output by one million bpd. The UAE will lower production by 163,000 bpd, Kuwait 135,000 bpd, Oman 42,000 bpd and Iraq 211,000 bpd.

Opec+ consists of the Saudi-led Organization of the Petroleum Exporting Countries (Opec) bloc of 13 countries and the Russian-led non-Opec group, which has 10 participants.

In the Mena region, credit fundamentals will face challenges from high debt burdens and tight financing conditions amid high global interest rates. Domestic interest rates will also remain high, given inflation trends, Fitch said.

“The Israel-Hamas war presents risks to tourism and sentiment, at least in the near term,” the report added.

In its 2024 outlook report, the ratings agency said that high oil prices should keep reasonable levels of liquidity in most GCC banking systems next year. 

Higher interest rates, supported by high levels of low-cost deposits and muted loan impairment charges, will continue to benefit profitability, it added.