Oil prices remain down about 70 percent from their mid-2014 highs above $100, though a steady rebound over the past two weeks has had some traders and investors wondering whether the market has reached a near-term floor. Oil prices traded higher on Tuesday, with internationally traded Brent Crude up around 0.7 percent at $36.80 per barrel.
Saudi Arabia, the largest oil producer of oil cartel OPEC, which has been pressured by other members to cut production in a bid to support prices was close to being debt-free before the precipitous fall in the commodity's price S&P said.
"The government was close to paying down all of its debt in 2015. But from July of that year, the government began a program of debt issuance, with Saudi riyal 20 billion ($5.3 billion) issued each month between August and December. We expect Saudi Arabia's debt stock to rise to 9 percent of GDP in 2016 and to about 30 percent by 2019," Cullinan said.
Global Chief Economist at HSBC, Janet Henry said risks for the Middle East and Latin America still remain firmly on the downside in 2016, even as the oil price has stabilized from record lows.
"Lower oil prices mean higher deficits, rising debt, strains to currency pegs and lower growth," she said in a note on Tuesday.
"We expect the pegs to remain intact, but with lower fiscal revenues, spending will have to be cut dramatically and subsidies on fuel reduced. We expect growth in the MENA region to be 1.9 percent in 2016, down from 2.9 percent in 2015," Henry added.