Since the price of oil crashed in June last year, the cost for a barrel of oil has dropped by more than 40%, standing at just $67 a barrel. Oil is a significant contributor to the global economy, especially in countries across the Middle East where oil production accounts for up to 90% of their GDP.
Understandably the drop in value of the oil reserves that contribute such a significant amount of money to the economy raises concerns about whether there’s still enough to invest into planned, in progress, and future projects in the Middle East.
While oil production accounts for a large proportion of the Emirates’ economy, cities like Dubai are seemingly untouched by any changes in oil price. Their leading position within tourism and commerce mean that the government are still going ahead with the construction projects planned to support the Dubai Exposition in 2020.
However, the same can’t be said for Abu Dhabi where an estimated US$200 billion worth of projects have been cancelled or postponed due to the high risk that falling oil prices have resulted in.
Construction here has been under close global scrutiny as a result of the Football World Cup. Despite concerns there may no longer be enough money for the project, Qatar has confirmed its investment of more than US$210 billion into the project. Given how extensive the plans are, the country’s infrastructure is receiving an overhaul to meet the demands of this global event- so construction here shows no indication of slowing.
Interestingly, despite this Kingdom being relatively vulnerable to drops in oil prices with a break point of around $95-106 this year, Saudi is continuing to grow at an impressive rate. Construction projects across Ridyah are creating residential developments and spaces that will go some way to provide a solution to the housing shortage here. Keen to cement its position on the world stage for its standing in business, serious construction work is underway to develop the new financial centre in Ridyah.
What’s more, the government are investing more than US$11billion in the Kingdom’s rail, roads and ports so construction projects will arise across Saudi. A significant US$37billion’s worth of Saudi’s budget will be dedicated to the education sector, constructing new schools and universities as well as upgrading existing institutions.
Despite concerns about how Saudi is funding these developments with the drop in value of such a major contributor to its economy, Ibrahim al-Assaf announced that their position is “very strong” and will see Saudi Arabia carry on with the US$50billion worth of projects it had committed to before the crash.