• 4 minutes Energy Armageddon
  • 6 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 12 minutes "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 3 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 8 hours Is Europe heading for winter of discontent with extensive gas shortages?
  • 1 day "False Flag Planted In Nord Stream Pipeline, GFANZ, Gore, Carney, Net Zero, U.S. Banks, Fake Meat, and more" - NEWS in 28 minutes
  • 3 days ""Green" Energy Is a Scam. It Isn't MEANT to Work." - By James Corbett of The Corbett Report
  • 1 day Wind droughts
  • 8 days Kazakhstan Is Defying Russia and Has the Support of China. China is Using Russia's Weakness to Expand Its Own Influence.
  • 10 mins "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 14 hours Australian power prices go insane
  • 4 days Xi Is Set To Be Re-Elected As China’s Leader
  • 1 day Europeans and Americans are beginning to see the results of depending on renewables.
  • 3 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 12 days Oil Prices Fall After Fed Raises Rates
  • 2 hours Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

More Info

Premium Content

Low Oil Prices Force Saudi Arabia To Cut 2021 Budget Plan

Saudi Arabia reduced its budget plan for 2021 by 7 percent from this year’s in response to the economic fallout of the pandemic, which pushed oil prices to multi-year lows.

Reuters reported that Riyadh will spend some $264 billion next year, or 990 billion riyals, as it battles a substantial deficit resulting from the latest oil price collapse.

Earlier this year, the Kingdom was forced by oil market circumstances to implement some unpopular austerity measures, including a triple increase in value-added tax and the cancellation of so-called cost-of-living allowances for much of the population. While the government insisted these were not austerity measures, the fact of the matter was that the drop in oil revenues threatened the economy of OPEC’s number-one exporter.

Saudi Arabia expects its 2020 deficit to hit $79.40 billion (298 billion riyals), representing 12 percent of gross domestic product, all because of the drop in oil revenues, which is seen at more than 30 percent this year. In 2021, however, the government expects the deficit to shrink to 4.9 percent of GDP and return to balance by 2023. Related: Goldman Turns Bullish On Oil: Sees $65 Brent In 2021

These expectations likely mean Saudi Arabia is banking on a pretty strong recovery in oil prices next year. It is not alone in this: Goldman Sachs recently said it expected Brent crude to rise to an average $65 a barrel in 2021 thanks to the rollout of Covid-19 vaccines that will stimulate oil demand growth. Yet there is always a risk that this might fail to pan out: Libya is pumping 1.28 million bpd, and OPEC will start adding another 500,000 bpd to daily production from January 2021 while mass vaccinations will take at least several months.

The Saudi finance ministry has acknowledged the challenging environment.

“In view of the uncertainty surrounding the pace of the global economic recovery and the potential persistence of the crisis, predicting the state of the oil market becomes increasingly challenging,” the ministry said in a statement as quoted by Reuters.

Yet, separately, Minister of Finance Mohammed al-Jadaan signaled optimism: “I think that the economic recovery of economic activities in the third and fourth quarters bodes well for economic growth in the coming years,” he told media.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News