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Saudi Arabia showers in oil revenues again  

07 Oct 2021

By Charles Kennedy  Saudi Arabia’s oil revenues are flowing in at the highest rate in three years, Bloomberg reported, thanks to the strong price recovery since the start of this year.  Revenues from oil hit $ 19 billion in July, according to Bloomberg data, which was a considerable improvement on last year, when revenues – like revenues across oil-producing nations – plunged, hurting their economies. For the Organisation of the Petroleum-Exporting Countries’ (OPEC) largest producer, the trough was reached in May-April last year, when oil revenues plunged to around $ 7 billion.  Revenues have risen in tune with production. According to another Bloomberg report, Saudi Arabia is already close to pre-pandemic production levels of 9.8 million barrels daily, and oil demand is still rising fast. This bodes well for next year’s revenues, too. “OPEC+ has had a very good year,” Trafigura Co-Head Ben Luckock told Bloomberg. “They have delivered; they have managed to thread the needle.” As a result, Saudi Arabia now expects to shrink its budget deficit to just 1.6% of gross domestic product (GDP) in 2022, with 2022 revenue 4.5% higher than earlier projections. The kingdom, however, has no plans to boost spending despite this much better outlook. This year’s deficit is seen at 2.7% of GDP – a lower figure than the Finance Ministry had initially planned for. Saudi Arabia is not alone in its oil triumph. All the members of the Gulf Co-operation Council (GCC) and fellow OPEC members are this year doing quite a lot better than they did last year. Last year, economic growth shrunk, debt surged, and the outlook was dire, especially over the long term because of the energy transition.  While some GCC members still have a fiscal breakeven oil price above current benchmark prices – Bahrain and Oman – all have benefited from the price rally this year that has seen Brent crude add some 50% since the start of the year. (Oilprice.com)


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