Oil's squeeze spreads from Gulf states to banks

Doha

LOW oil prices are forcing Gulf states to borrow to prop up their economies and are now taking their toll on the region's banks too, complicating their efforts to raise capital required by regulators.

The impact of crude's fall from more than US$100 to below US$30 a barrel in less than 18 months has already been felt by oil and gas revenue dependent Middle Eastern countries which have had to borrow to prop up their economies.

And international investors have been avoiding the Gulf region's debt in recent months as a result, concerned about slower economic growth and substantial budget deficits.

This has had a knock-on effect on banks from Doha to Muscat, with the ensuing slump in stock prices and bond market volatility making it impossible for them to raise new capital so far this year, a situation which is unlikely to ease in the near future as the…