• 1 hour Nigeria Files Suit Against JPMorgan Over Oil Field Sale
  • 8 hours Chinese Oil Ships Found Violating UN Sanctions On North Korea
  • 13 hours Oil Slick From Iranian Tanker Explosion Is Now The Size Of Paris
  • 17 hours Nigeria Approves Petroleum Industry Bill After 17 Long Years
  • 19 hours Venezuelan Output Drops To 28-Year Low In 2017
  • 21 hours OPEC Revises Up Non-OPEC Production Estimates For 2018
  • 1 day Iraq Ready To Sign Deal With BP For Kirkuk Fields
  • 1 day Kinder Morgan Delays Trans Mountain Launch Again
  • 1 day Shell Inks Another Solar Deal
  • 2 days API Reports Seventh Large Crude Draw In Seven Weeks
  • 2 days Maduro’s Advisors Recommend Selling Petro At Steep 60% Discount
  • 2 days EIA: Shale Oil Output To Rise By 1.8 Million Bpd Through Q1 2019
  • 2 days IEA: Don’t Expect Much Oil From Arctic National Wildlife Refuge Before 2030
  • 2 days Minister Says Norway Must Prepare For Arctic Oil Race With Russia
  • 2 days Eight Years Late—UK Hinkley Point C To Be In Service By 2025
  • 2 days Sunk Iranian Oil Tanker Leave Behind Two Slicks
  • 2 days Saudi Arabia Shuns UBS, BofA As Aramco IPO Coordinators
  • 2 days WCS-WTI Spread Narrows As Exports-By-Rail Pick Up
  • 3 days Norway Grants Record 75 New Offshore Exploration Leases
  • 3 days China’s Growing Appetite For Renewables
  • 3 days Chevron To Resume Drilling In Kurdistan
  • 3 days India Boosts Oil, Gas Resource Estimate Ahead Of Bidding Round
  • 3 days India’s Reliance Boosts Export Refinery Capacity By 30%
  • 3 days Nigeria Among Worst Performers In Electricity Supply
  • 3 days ELN Attacks Another Colombian Pipeline As Ceasefire Ceases
  • 4 days Shell Buys 43.8% Stake In Silicon Ranch Solar
  • 4 days Saudis To Award Nuclear Power Contracts In December
  • 4 days Shell Approves Its First North Sea Oil Project In Six Years
  • 4 days China Unlikely To Maintain Record Oil Product Exports
  • 4 days Australia Solar Power Additions Hit Record In 2017
  • 4 days Morocco Prepares $4.6B Gas Project Tender
  • 4 days Iranian Oil Tanker Sinks After Second Explosion
  • 7 days Russia To Discuss Possible Exit From OPEC Deal
  • 7 days Iranian Oil Tanker Drifts Into Japanese Waters As Fires Rage On
  • 7 days Kenya Cuts Share Of Oil Revenues To Local Communities
  • 7 days IEA: $65-70 Oil Could Cause Surge In U.S. Shale Production
  • 7 days Russia’s Lukoil May Sell 20% In Oil Trader Litasco
  • 7 days Falling Chinese Oil Imports Weigh On Prices
  • 7 days Shell Considers Buying Dutch Green Energy Supplier
  • 8 days Wind And Solar Prices Continue To Fall
Alt Text

Will 1 Billion EVs Crash Gasoline Demand?

Electric vehicle sales are picking…

Alt Text

Gas Wars: The First Energy Conflict In 2018

Territorial disputes over newly discovered…

Alt Text

Oil-Rich Venezuela Is Out Of Gasoline

Iván Freites, a secretary of…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

More Info

Will Low Oil Prices End Saudi Arabia’s Gas Subsidies?

Gas

Although Saudi Arabia has managed to narrow its budget deficit, the Kingdom continues to feel the fiscal pressure of low oil prices, and is mulling over the phasing out of gasoline subsidies, and making gas prices level with varying international prices, Bloomberg reported on Monday, citing a person familiar with the plan.

Under the plan, Saudi Arabia is said to be studying raising gasoline prices by the end of 2017 to bring them to parity with international prices—which would mean a rise of about 80 percent for octane-91 grade gasoline compared to current prices. A decision is expected this month or next, Bloomberg quoted the person with knowledge of the issue as saying.

According to Bloomberg’s source, the Saudis are planning a one-time hike of gasoline and jet fuel by the end of this year, while other fuel prices would be gradually increased between 2018 and 2021.

The Saudi authorities could cap increases of diesel and heavy fuel oil prices to spare the economy, as those fuels are heavily used in industry and power generation.

At the end of 2015, when Saudi Arabia was running a budget deficit of around 15 percent of its gross domestic product (GDP), the Kingdom started cutting its generous subsidies after the collapse of the oil prices resulted in wide budget gaps in the finances of the Middle Eastern producers. Related: China To Dictate Energy Growth In Coming Years

According to the International Monetary Fund (IMF), Saudi Arabia’s non-oil growth is expected to pick up to 1.7 percent in 2017, but overall real GDP growth is seen close to zero as oil GDP declines in line with Saudi Arabia’s pledge to reduce production as part of the OPEC/non-OPEC output cut deal.  

The IMF expects that the plans for the energy price increases and non-oil revenue reforms would help the Saudis further cut the budget deficit. The deficit is expected to drop from 17.2 percent of GDP in 2016 to 9.3 percent of GDP in 2017, and to just under 1 percent of GDP by 2022, the IMF said, adding that “this assumes that the major non-oil revenue reforms and energy price increases outlined in the Fiscal Balance Program are introduced on schedule and that operational and expenditure savings identified so far by the Bureau of Spending Rationalizations are realized.”  

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Refman on September 18 2017 said:
    Saudi would be wise to follow Norway's model and tax gasoline rather than subsidize it. The less oil used locally, the more you can sell.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News