OIL PRICES, DOMESTIC RESOURCE GAPS, AND BREAKEVEN OIL PRICES IN THE OIL-EXPORTING COUNTRIES

This paper analyzes the economic impact of the oil prices, the domestic resource gaps, and thefiscal and external breakeven oil prices on the oil exporting countries (OECs). Specifically, thispaper aims to examine the empirical behaviors of the oil prices, the domestic resource gaps, andthe fiscal and external breakeven oil prices along with their influence on the economy of SaudiArabia in order to determine the oil-economic gain/loss (OEG/L) and its influences on the SaudiArabia economy over the period of 2008 to 2018. This study uses exploratory research design,with both linear and nonlinear regression models. This paper finds the oil prices, the domesticresources gaps, and the fiscal and external breakeven oil prices exert significant influences on theeconomic growth in Saudi Arabia. In addition, the fiscal breakeven oil price is considerably highin Saudi Arabia and has a marginal OEG/L of USD 2.3582 per barrel. Moreover, it is observedthat the oil price has an irregular and unpredictable movement behavior and co-moved with thedomestic resource gaps in Saudi Arabia. The findings implies that the economy diversification inSaudi Arabia could be achieved by setting policy on improving non-oil sectors and encouragingprivate sector involvement