Saudi Arabia and Bahrain See Low Oil Price Prompt Ratings Cut

  • Saudi Arabia’s rating downgraded to A1 from Aa3: Moody’s
  • Outlook seen negative for Bahrain, U.A.E., Kuwait, Qatar

Moody's Cuts Saudi Arabia, Bahrain Ratings

Middle Eastern oil producers including Saudi Arabia and Oman had their ratings lowered by Moody’s Investors Service because of a collapse in oil prices, according to a statement from the credit-ratings company on Saturday.

The long-term issuer rating on Saudi Arabia, the world’s biggest oil exporter, was cut to A1 from Aa3 as lower oil prices may lead to a "material deterioration" in the nation’s credit profile. Bahrain’s rating was reduced to Ba2 from Ba1 and Oman was downgraded to Baa1 from A3, while the outlook for crude exporters including Abu Dhabi, Qatar and Kuwait were negative.

Brent crude, the global benchmark, is almost 40 percent lower than in November 2014, when Saudi Arabia led a decision by the Organization of Petroleum Exporting Countries to keep pumping to defend market share in the face of swelling global inventories. While demand from emerging nations such as India was spotted in the first half of this year, further gains in oil prices are likely to be limited by "brimming" stockpiles of crude and products, the Paris-based adviser International Energy Agency said in a report on May 12.

"Lower oil prices have led to a material deterioration in Saudi Arabia’s credit profile," Moody’s said in the statement. "A combination of lower growth, higher debt levels and smaller domestic and external buffers leave the Kingdom less well positioned to weather future shocks."

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