Surging oil prices unlock budgets for major IT projects
Economic outlook in oil-rich states is "rosy," according to local business leaders. Projects put on hold last year are coming onstream.
Oil prices fell just shy of $34 per barrel yesterday, with no signs of an impending price decrease. Prices have now exceeded $28 per barrel for almost 3 weeks, swelling government coffers in the oil-rich states of Kuwait and Saudi Arabia.
That increased wealth is having a dramatic effect on IT companies, which are finding lucrative projects — previously put on hold due to poor ecomonic conditions — opening up daily.
"The climate overall is very good. The high oil prices have added a lot of positive feeling to the market. Things are really turning rosy right now and everybody is excited. Many projects have been released by the government that were put on hold for budgetary reasons," Ibrahim Al Moaiqel, chief executive of Jeraisy in Saudi Arabia told ITP.net recently.
Confidence is sky-high at the government level that strong oil prices are sustainable. $33 per barrel is unlikely to last, but OPEC, with the agreement of Gulf states, is looking to stabilise prices at around $25 per barrel.
Budgets in Saudi Arabia have been increased in several key areas. On Monday, for example, Prince Sultan, second deputy premier and minister of defense and aviation, announced that spending on education would increase to SR49.38 billion ($13.53 billion) this year. The Council of Ministers has consistently stated that education in technology and skills for the new Internet economy will need particular focus.
In Kuwait, where KPC said that its crude had sold at an average price of $23 in the last fiscal year, state spending power is also surging.