As oil prices fall to their lowest level in 11 years, the Saudi government yesterday announced a budget with the most cautious oil price in 10 years despite it facing the problem of the current decline and volatility in oil prices by reducing its dependence on oil revenues. This is a move that analysts consider a sign that Riyadh will persist with its current oil policy based on the continuation of its oil production at rates that exceed 10 million barrels daily to meet the demands of customers and leave prices to be determined by markets.

The economist Dr John Sfakianakis told Asharq Al-Awsat that this is the most cautious budget in recent years as it is the first time in more than ten years that the oil price has been calculated as less than $50 per barrel in a budget.

It is expected that Saudi Arabia calculated the budget for the coming year based on an oil price of $37 per barrel whilst Jadwa Investment calculated the price to be $40 per barrel.

However, it is expected that Saudi Arabia will continue to reduce its dependence on oil in its budget for the coming year with a sharp drop in the price of oil. Sfakianakis says that he expects Saudi Arabia to reduce the percentage of its dependence on petroleum revenues in the coming year to 70%, thereby completing its efforts for the current year.

Due to these low prices, 9 out of 13 OPEC member states including Saudi Arabia, Iraq, Iran and Kuwait announced deficits in their budgets for next year making it impossible for some countries to continue spending in light of oil prices fluctuating around $36 a barrel.