Low Oil Hitting Saudi Arabia Hard
There’s a couple of tidbits out today about Saudi Arabia. First up, its reserves continue to shrink. The IMF projects that Saudi Arabia’s budget deficit will exceed 400 billion riyals ($107 billion) this year as lower oil revenues hurt the economy. Oil generally accounts for 90% of government revenue, whereas this year it will only account for 81%. Given this turn for the worse, the government may assess removing subsidies on gasoline, which currently costs 16 cents per liter, while a shift towards renewables may also be considered.
Secondly, Saudi Arabia’s state-owned oil company, Saudi Aramco, has confirmed that the acting president and chief executive, Amin H. Nasser, will assume these positions on a permanent basis. And in a final OPEC-related tidbit, an internal report from the cartel projects oil prices rising at a steady $5 per annum, to reach $80 by 2020.