Government advisor: A positive oil price shock reduces the budget's need for borrowing.

 Government advisor: A positive oil price shock reduces the budget's need for borrowing.

The Prime Minister's financial advisor, Mazhar Mohammed Saleh, confirmed that the geopolitical circumstances resulting from the ongoing war between Iran and Israel undoubtedly contributed to generating a "positive oil price shock," as oil markets have recovered from the decline in the oil asset cycle (i.e., the previous negative oil shock) in the recent period, with oil prices now making their way towards a rapid rise.

Saleh explained to Al Furat News Agency that "the average oil price decline of $10 per barrel of exported oil from the levels of the beginning of the current year 2025 has returned to witness an increase to its previous stable conditions before the decline, and within a few days, with an increase estimated at about $10 per barrel of exported crude oil, and in an opposite manner under the influence of the positive oil price shock."

He added, "This will undoubtedly reduce the general budget's need for large-scale actual borrowing if public spending is based on the annual minimum of 160 trillion dinars per year, and at an average annual oil price of $75 per barrel. This means covering operating and investment expenses relatively comfortably if the oil barrel maintains an annual average that exceeds or approaches the aforementioned average increase in exports throughout the current fiscal year. This is an activity for the general budget in 2025 that is similar to the spending developments that occurred in 2024."

Saleh pointed out that "what we see is that the current high price structure will likely stabilize without declining even if hostilities between the two parties to the ongoing conflict in the Middle East cease. This is due to the influence of hedging factors and the buildup of fossil fuel stocks at the global level, in addition to the rapid expiration of the downward cycle of oil assets after taking its current stable form and maintaining balance in energy markets under the influence of the continued multiplicity of geopolitical tensions in more than one place in the global energy demand belts."

He stressed that "this does not preclude diversifying non-oil revenue sources in a transparent and more governed manner, and imposing discipline on any unnecessary expenditures that can be postponed at the present time, in light of the policy."  link