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Saudi Arabia plans to disentangle itself so thoroughly from the crude oil industry that oil prices won’t play a significant role in shaping the country’s fiscal policies, Saudi’s Finance Minister Mohamed Al-Jadaan said Wednesday at a conference in Riyadh.
“Our aim is within the period to 2030 we don’t even look at the oil price,” Al-Jadaan said.
Saudi Arabia is currently heavily reliant on crude oil revenues, and oil prices play a major role in dictating the country’s budget and fiscal policies. But per the country’s Vision 2030 plan, Saudi Arabia’s non-oil revenues will soon cover a much larger chunk of the budget spend, which means, according to Al-Jadaan, that Saudi Arabia’s dependence on oil revenues will decrease substantially in the coming years.
While a laudable goal fiscally speaking, the country’s progress in diminishing the support of oil revenues in its budget has yet to be seen. Saudi Arabia’s oil revenues last year reached a staggering $326 billion—the most annual oil revenues the Kingdom raked in since 2012. What’s more, the value of its oil exports last year accounted for more than 70% of the Kingdom’s total exports, and for December 2022, the value of Saudi Arabia’s oil exports reached 79% of the total. This helped Saudi Arabia book its first annual budget surplus in nearly a decade.
Ironically—or perhaps not—it is these very substantial oil revenues that Saudi Arabia is looking to use to pay for new projects that will help diversify its economy away from oil.
“Oil revenues are very important to us as they are a catalyst to continue to invest in our vision,” Al-Jadaan said.
Saudi Arabia is currently producing more than 10.3 million barrels of crude oil per day, according to OPEC’s latest Monthly Oil Market Report.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.