Recent downslide in global oil prices has wide ramifications impacting the recovery of global economy. Most of Gulf nations are heavily dependent on oil exports as the sole revenue spinner to finance its economic growth and social welfare measures.

Oil prices have fallen to 4 year lows throwing haywire the budgetary allocations of nations. The price of Brent crude oil has fallen to USD 77.52. The benchmark US crude oil price is at USD 74.28. The price has fallen sharply since the summer and is 30% below its June price. Present debacle is triggered by increased production of US Shale oil leading to over \supply in the market and falling demand from slow global economy.

As the price of oil extends a free fall that began this summer, countries around the world that rely on oil revenues are bracing for an imminent economic and budget hit. The drop is widening budget gaps in the Gulf States like Saudi Arabia, the United Arab Emirates, Qatar, Oman and Bahrain that rely heavily on oil to pay infrastructure development and government services. A sustained decline of USD 25 a barrel in the oil price would reduce the revenues of most Gulf countries by eight percent of gross domestic product, and put many of them into a fiscal deficit situation.