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Saudi Arabia Optimistic about Oil Prices in 2017 - ASHARQ AL-AWSAT English Archive
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Khobar – The Saudi Arabian budget was expected to be more clear this year concerning the announcement of oil prices rates used to calculate the budget’s estimations, yet, the oil price rate was maintained hidden till the next year.

Khalid A. Al-Falih, Saudi minister of Energy didn’t reveal the oil price which is supposed to be set in the budget, but he said that the Kingdom has based on a “reserved scenario” concerning oil prices in its budget for this year.

The Minister said that Saudi Arabia has moved forward in its developmental projects regardless of oil prices, but he expected them to raise within the coming years.

Asharq Al-Awsat knew that Saudi Arabia have set USD55$ as price for the oil barrel in its new budget, expecting oil revenues to increase by 46% and to reach SAR480 billion in 2017.

Al Ahli Commercial Bank, one of the biggest banks in the Kingdom issued a special report on the Saudi budget, in which it cleared that USD50 per barrel was the price adopted by the government to calculate official figures of revenues and expenditures; the equivalence price was USD69 per barrel compared to USD62 in 2016’s budget.

However, Al Ahli expected the oil barrel prices rate to remain at USD55 along with steady production on 10.1 million barrel daily in 2017 given that the Kingdom will reduce its output during the first half of 2017 by around 486 barrel daily in accordance with Opec’s deal.

Sources said that Saudi Arabia has set its expectations for this year’s budget before the Opec meeting and its historical decision to reduce oil output to around 1.2 million barrel per day starting the first day of 2017; this decision is supposed to positively affect oil prices and maintain their stability between USD50 and USD60.

It is worth noting that the Kingdom will handle the biggest burden of the oil output’s reduction during 2017 as it will drop its production by 486 barrel daily to reach 10.5 million barrel per day.

Sources told that Saudi Arabia supposed the crude oil barrel to reach USD65 in 2020, which will secure the budget’s stability; it has also planned to rationalize expenditures by around SAR200 billion and to increase non-oil revenues to USD30 billion by that time.

As part of its expenditures’ reduction, the kingdom intends to reduce support on energy; Al Falih said that his country will maintain its politics dedicated to reform domestic energy prices between 2017 and 2020.

The Minister added that the final touches on the new domestic prices rates will take some time, but changes will be applied in 2017 but not within the first two months.

After two years of constant drop caused by the oil prices’ crisis, the 2017’s budget showed a growth in expenditures by 8% to SAR890 million compared with the real expenditure in 2016.