Mena Economies Face New Pressure as Oil Prices Drop

Oil prices recently slid to around US$57 per barrel (for US West Texas Intermediate) amid a widening sense that global supply is outpacing demand, even as the Opec+ group (led by Opec members) ramps up production

This drop has particular implications for economies in the Mena (Middle East & North Africa) region, many of which depend heavily on oil revenues, according to Mohanad Yakout, Senior Markets Analyst, Scope Markets.

On one hand, the price decline tightens fiscal room: governments in major oil‑exporting states face lower margins per barrel, which can impair budgets, slow down sovereign investment and complicate ongoing diversification efforts beyond hydrocarbons.

On the other hand, higher volumes of oil production by Opec+ members may partly offset the revenue loss per barrel, but only if the volume gains are large and sustained and the cost structure remains low, said Yakou.

For GCC economies, recent data suggest growth may still hold up thanks to increased output.

For example, a Reuters poll forecasts the UAE growing about 4.6  per cent in 2025 despite the weaker oil price environment.

Yet the weaker oil price does exert pressure on the long‑term plans (such as “Vision” programmes in the GCC) which assume higher and more stable oil prices to fund diversification, infrastructure and job creation.

In summary, the fall of oil to about US$57 per barrel amid rising production signals a turning point: MENA oil‑exporters must increasingly rely on volume, cost‑control and economic diversification.

While short‑term growth may be sustained by high production, a prolonged period of weak prices would test fiscal resilience, delay non‑oil investments and push governments to accelerate reforms away from hydrocarbon dependence.