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The Oil Prices : Comparison Of Policy Between Kuwait And The Uae

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The Plummeting Oil Prices: Comparison of Policy Between Kuwait & the UAE
Introduction
The Gulf Cooperation Council states (GCC) are heavily dependent on oil to generate economic growth. Oil and natural gas are the two main sources of capital inflow that enters into these countries. GCC countries’ dependency creates economies that are sensitive to any decline in oil prices. After four years of relatively stable oil prices of around $105 per barrel (bbl), a sharp and notable decline occurred in June 2014. In the face of the plummeting oil prices, most GCC countries have cut their spendings to cope with the significant reductions in their revenues.

Given than oil prices fell by 29% in 2015 and 44% in 2014, the GCC countries are facing economic crisis that could translate into economic deficits for some. Economists suggested that Bahrain and Oman are the two GCC states that are most severely affected by the drop in oil prices, while Kuwait, Saudi Arabia, the United Arab Emirates, and Qatar are in good standing. The reasoning behind it, is that Kuwait, Saudi Arabia, the United Arab Emirates, and Qatar, are considered as major oil producers. Whereas, Oman and Bahrain do not contribute as much to the production of oil and natural gas. Major oil producers among the GCC are well-equipped to deal with such economic upheavals, as they own financial wealth in the form of foreign exchange reserves, as well as in sovereign wealth funds. Regardless of the economic standing of some

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