Understanding the Oil Market, the Gulf Cooperation Council (GCC) Countries Dependency on Oil Market and it is Future

                Kuwait is a GCC country rich in oil flanked by powerful and large neighbours i.e. Saudi Arabia, Iran, and Iraq. The country is one of the leading oil producers in the world; despite heavy oil revenues, the Kuwait economy has badly suffered the global financial crisis. Approximately 90% of the Kuwaiti exports revenues are made through oil (BBC, 2015). The minimum wage level of Kuwait is 60 in local currency or $216 per month and it has one of the strongest currencies in the world (Minimum-Wage.org, 2019). 

Main Economic Indicators of Kuwait Understanding the Oil Market, the Gulf Cooperation Council (GCC) Countries Dependency on Oil Market and it is Future

Year GDP GDP per capita Inflation Unemployment Oil rents

2006 3.36E+10 14120.28421 16.1734016 ----- 54.76403408

2007 3.56E+10 14212.13984 4.3067887 1.5 50.7494378

2008 3.65E+10 13746.77153 18.6619843 1.75 55.66812223

2009 3.39E+10 12019.09169 -17.2163488 1.639999986 38.07541296

2010 3.31E+10 11033.41702 11.165714 1.820000052 49.20524995

2011 3.63E+10 11364.31226 17.2277817 ----- 61.2313538

2012 3.87E+10 11387.56068 7.48670295 ----- 61.07087298

2013 3.91E+10 10869.1538 0.22333288 ----- 57.44920334

2014 3.93E+10 10392.02104 -6.75791273 2.900000095 54.25964485

2015 3.95E+10 10046.35913 -25.9584189 2.200000048 37.10016985

2016 4.09E+10 10102.91212 -6.13364363 2.160000086 31.63953311

Data Source: World Bank

Analysis of Kuwait Economic Indicators Understanding the Oil Market, the Gulf Cooperation Council (GCC) Countries Dependency on Oil Market and it is Future

        The above data represents the economic overview of Kuwait from 2006 to 2016, the data is collected from world development indicators “----” represents the missing values that are not reported by world bank. It can be observed from the data that Kuwait has been experiencing a significant GDP growth for several years. However, the GDP per capita was highest in 2007, then it kept on decreasing and reached its lowest level in 2013. The decrease in GDP per capita of Kuwait started after the global financial crisis and the country could not recover from this decline till 2016. A high level of fluctuation can be observed in the inflation level of Kuwait that declined to 1 digit from 2 digits in 2007. After the global financial crisis, the inflation again increased to double-digit in 2008 that was more than 2006 and reached single digit again in 2012. The inflation rate value of Kuwait has surprisingly decreased in 2013 and reached almost 0 per cent. In 2015, it again increased drastically and reached almost 26 per cent that is considered as the highest value, however, in 2016, the inflation in Kuwait again reached its normal level. The highest rate of unemployment in Kuwait is observed in 2014 that declined till 2016. Now talking about the oil rents, it can be seen that the country has experienced good values of oil rents in 2006 and 2008. In 2009, a drastic decline in oil rents of Kuwait can be observed and the global financial crisis is considered as the main reason for this decline. However, the country recovered within one year and oil rents again started increasing and reached the highest level in 2012. 2015 and 2016 have also experienced a drastic decrease in the values of oil rent of Kuwait.

Overview of Saudi Arabia Understanding the Oil Market, the Gulf Cooperation Council (GCC) Countries Dependency on Oil Market and it is Future

        The Kingdom of Saudi Arabia is known as one of the key players in GCC and another Arab world. The importance of the country as an exporter of oil has made its economic interdependence necessary with foreign countries and it is bordered by Iraq, Jordan, Bahrain, Qatar, Kuwait, Oman, and Yemen. In the 1990s, the government of Saudi Arabia initiated structural reforms and the country will be hosting G20 in 2020 (Australian Government, 2018).

Main Economic Indicators of Saudi Arabia Understanding the Oil Market, the Gulf Cooperation Council (GCC) Countries Dependency on Oil Market and it is Future

Year GDP GDP per capita Inflation Unemployment Oil rents

2006 1.77927E+12 72392.06337 11.5723918 6.25 51.15100907

2007 1.81214E+12 71760.59713 8.435381 5.730000019 48.05389689

2008 1.92539E+12 74222.70144 17.6898312 5.079999924 54.26021196

2009 1.88575E+12 70729.16249 -15.7132304 5.380000114 34.066473

2010 1.98078E+12 72223.45221 17.1912919 5.550000191 37.90461395

2011 2.17879E+12 77158.11731 15.5293906 5.769999981 49.28965859

2012 2.2967E+12 78961.3018 4.01551536 5.519999981 47.22487207

2013 2.35869E+12 78768.79546 -1.2163346 5.570000172 44.18810477

2014 2.44484E+12 79437.99333 -2.26999804 5.71999979 40.01229428

2015 2.54524E+12 80654.83385 -16.9085254 5.590000153 23.28576642

2016 2.58776E+12 80176.69771 -3.04643099 5.650000095 19.43406464

Data Source: World Bank

Analysis Understanding the Oil Market, the Gulf Cooperation Council (GCC) Countries Dependency on Oil Market and it is Future

        The above data represents the economic overview of Saudi Arabia from 2006 to 2016, the data is collected from world development indicators. The overall GDP growth of Saudi Arabia has been lower than of Kuwait while the GDP per capita of the country seems to be much higher in Saudi Arabia than Kuwait. Unlike Kuwait, Saudi Arabia seems to be less affected by the global financial crisis because no drastic change is observed in GDP growth and GDP per capita in Saudi Arabia like Kuwait during the global financial crisis. In 2016, the inflation rate in Saudi Arabia is half of the inflation rate in Kuwait. However, unemployment in Saudi Arabia has been much more than unemployment in Kuwait, unemployment did not decrease from 5 per cent. Now if we compare the oil rents for both countries then it can be observed that oil rents follow an almost similar trend in both countries; both countries have faced the lowest level of oil rents in 2016, however, Kuwaiti oil rents are almost double than Saudi oil rents. The oil rents are comparatively good in Kuwait than Saudi Arabia.

Conclusion on Understanding the Oil Market, the Gulf Cooperation Council (GCC) Countries Dependency on Oil Market and it is Future

        In a nutshell, this paper analyzed the oil market of GCC considering Kuwait and Saudi Arabia. The data on major economic indicators of Kuwait and Saudi Arabia i.e. real GDP, GDP per capita, inflation rate, unemployment, and oil rents are collected from world development indicators by World Bank for 2006 to 2016. The comparative analysis is performed for both countries by analyzing the data. The results have shown that approximately 90% of the Kuwaiti exports revenues are made through oil. The global financial crisis has impacted Kuwait more and Saudi Arabia less. After the global financial crisis, inflation increased to double-digit in Kuwait. In 2009, a drastic decline in oil rents of Kuwait can be observed and the global financial crisis is considered as the main reason for this decline. The overall GDP growth of Saudi Arabia has been lower than of Kuwait while the GDP per capita of the country seems to be much higher in Saudi Arabia than Kuwait. Kuwaiti oil rents are almost double than Saudi oil rents. The oil rents are comparatively good in Kuwait than Saudi Arabia.

References of Understanding the Oil Market, the Gulf Cooperation Council (GCC) Countries Dependency on Oil Market and it is Future

Australian Government. (2018, November). Saudi Arabia country brief. Retrieved from https://dfat.gov.au/geo/saudi-arabia/pages/saudi-arabia-country-brief.aspx

BBC. (2015). Kuwait profile - an overview. Retrieved from https://www.bbc.com/news/world-middle-east-14646762

Minimum-Wage.org. (2019). Kuwait Minimum Wage Rate in 2019. Retrieved from https://www.minimum-wage.org/international/kuwait