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How the Saudis are coping with lower oil prices and revenues- cutting gasoline subsidies and other spending to reduce budget deficits in 2016
12/28/2015
Gasoline prices for some grades of gasoline sold in Saudi gas stations will increase by 50% as the Saudi Finance Ministry copes with dropping oil revenues. The 2016 budget shows adeficit of $87 billion compared to $98 billion in 2015. At this rate Saudi Arabia would exhaust its foreign exchange reserves of $640 billion by 2020. Saudi Arabia has a rapidly growing population which will increase budget pressures and local oil demand. Its defense spending to counter Iran and Russia in the Syria-Iraq conflict and in Yemen also affect spending. Lower oil prices are partly a result of the geopolitical conflict in the region and rivalry betweeen Iran backed by Russia and Sunnis led by the Saudi and Emirates, as well as technology in shale oil production. This comes at a good time for China as it slows, India as it increases its growth rate, and the U.S. and Eurozone as their economies recover from a deep recession, Japan as it improves its economy from low or no growth. For Russia it is seen as away to shift away from imports to domestic industry. For the Saudis an opportuntiy to cut subsidies and improve the productivity of spending.
Grouped Articles
Saudi Arabia, Squeezed by Low Oil Prices, Cuts Spending to Shrink Deficit
New York Times 12.28.2015
Oil Prices at $30 Bend Nations, But Which Ones Could Break?
Wall Street Journal 01.13.2016
Saudi Arabia Keeps Pumping Oil, Despite Financial and Political Risks
New York Times 01.27.2016
Oil-Price Poker: Why the Saudis Won’t Fold ‘Em
Wall Street Journal 02.01.2016
Young Saudis See Cushy Jobs Vanish Along With Nation’s Oil Wealth
New York Times 02.16.2016
Weak Oil Prices Curbing Production
Wall Street Journal 04.13.2016
Saudi Arabia Approves Economic Reform Program
Wall Street Journal 04.26.2016
Saudi Arabia’s post-oil future
Economist 04.29.2016
Saudi Oil Output Sets Record Despite Global Glut
WSJ 08.10.2016
The Saudi Shake-Up Has One Goal: Drag the Country Into Modern Era
WSJ 06.22.2017
Oil Falls Most Since 2015 on Fears of Oversupply
WSJ 11.13.2018
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