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Oil revenues for the world’s largest oil exporter, Saudi Arabia, continued to slide in May after the Kingdom ended its oil price war with Russia, with the income from oil exports plunging by 65 percent year on year, data from Saudi Arabia’s General Authority for Statistics showed on Thursday.
Saudi Arabia’s total exports plunged in May 2020 compared to May 2019. The significantly lower value of oil exports was the main drag on overall Saudi merchandise exports in May – the first month in which the OPEC+ group cut production by record levels after Saudi Arabia and Russia forged a new deal to cut supply to the market amid the demand crash in the pandemic.
The value of Saudi Arabia’s oil exports plunged by US$11.8 billion (44.277 billion Saudi riyals), or by 65.0 percent year on year in May, the General Authority for Statistics said.
The share of oil exports in total exports declined from 78.6 percent in May 2019 to 65.4 percent in May 2020.
The drop in oil revenues for May follows a similar drop of US$12 billion in Saudi oil revenues for April, when the Kingdom made good on its promise to flood the market with oil and contributed to the oil price plunge to the lowest since 1999 together with the crash in demand during the lockdowns in Europe and the United States.
The rebound in oil prices since May could slow the drop in Saudi oil income in June and July, but the world’s top oil exporter is feeling the pinch from the low oil prices and the low oil exports as per the OPEC+ deal.
Earlier this year, after the price crash it helped create by flooding the market with oil, Saudi Arabia tripled its value-added tax (VAT) and suspended cost-of-living allowances as part of a new round of painful austerity measures to save its finances.
Earlier in July, the International Monetary Fund (IMF) said that the price plunge and the production cuts would hit oil exporters in the Middle East and North Africa (MENA) hard, with the combined oil income for those countries expected to plummet by US$270 billion this year compared to 2019.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com