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Page added on October 4, 2020

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Saudi Arabia Pegs Budget to Oil Staying Around $50 Until 2023

Public Policy

Saudi Arabia’s Finance Ministry seems to think that oil prices will stay around $50 a barrel for at least the next three years.

That’s according to Goldman Sachs Group Inc.’s analysis of the kingdom’s pre-budget statement released on Sept. 30.

“Using our own estimates for the breakdown of government revenues, we calculate that the numbers presented in the budget statement are based on an average oil price of around $50 a barrel between 2020 and 2023,” said Farouk Soussa, a London-based analyst at Goldman.

Brent crude fell 6.3% to $39.27 a barrel last week as more countries tightened restrictions to counter the coronavirus pandemic and U.S. President Donald Trump got infected, causing traders to fret about the outlook for energy demand.

While oil at $50 would represent a 25% rise from current prices, it would would still be far below the pre-pandemic level of around $65 and less than Saudi Arabia needs to balance its budget.

Goldman’s calculations are roughly in line with those of Cairo-based investment bank EFG Hermes, which said Saudi Arabia is basing next year’s budget on an oil price of $50 to $55. Goldman is itself more bullish, forecasting that Brent will climb to $65 by the end of 2021.

Saudi officials expect the country’s fiscal deficit to narrow to 5.1% of gross domestic product in 2021 from 12% this year as they cut spending, according to last week’s statement.

The kingdom tends to take a relatively conservative view of crude prices in drawing up its budget and doesn’t divulge its assumptions, leaving analysts to estimate them from other projections. The Finance Ministry didn’t immediately respond to a request for comment on Sunday.

Saudi Arabia would need oil to trade at $66 to balance its budget in 2021, according to estimates from the International Monetary Fund.

IMF Breakeven Oil Prices in $/barrel (as of April 2020):
Country 2019 2020 2021
Iran 244 389 320
Iraq 56 60 54
Kuwait 53 61 60
Saudi Arabia 83 76 66
United Arab Emirates 67 69 61

Saudi Arabia’s caution on prices comes as oil giants including BP Plc and Total SE predict the era of growing global demand for energy is over or coming to an end barely a decade from now.

That’s especially a concern for countries such as Saudi Arabia, where oil accounted for nearly two-thirds of government revenue in 2019. In the second quarter, Saudi earnings from crude exports dropped to the lowest on a quarterly basis since at least 2016, despite the kingdom leading OPEC’s efforts since May to cut supply and bolster prices.

“It seems they are assuming some pick-up next year, but oil income will be flat between 2021 and 2022, and will only start to pick up again in 2023,” said Mazen Al-Sudairy, head of research at Al Rajhi Capital.

bloomberg



3 Comments on "Saudi Arabia Pegs Budget to Oil Staying Around $50 Until 2023"

  1. Theedrich on Tue, 6th Oct 2020 4:32 am 

    LEMMINGS for BIDEN will win. They want traitors. It is now known that the entire, 3½ year assault on Trump was a criminal operation orchestrated by the Clinton Hillary/FBI syndicate to perform a political assassination on the President by accusing him of collusion with Russia — which the Clinton gang had itself been doing.

    The FBI is still directed by anti-Trumpist and Left-leaning Christopher A. Wray and other malefactors.  For some reason it is regarded as currently politically inopportune to fire him.  But he and others are secretly undermining all attempts to unearth more documents about the Clinton plot.  Another, even worse criminal is Gina Haspel, Director of the Central Intelligence Agency (CIA), who is “slow-walking” — that is, blocking — the declassification and release of records on “Russiagate.”  Why is she still on the public’s payroll?  There are also similar DeepStaters in the so-called “Justice” Department who are delaying the process of getting more documents on the Democrat malfeasance.  It would be interesting to know just why they are not ejected from their strangleholding positions.  (See https://www.politico.com/story/2018/04/07/trump-doj-fbi-clinton-emails-508049.)

    The result:  the senile former Vice President and his thieving, traitorous family are now on their way to victory, due to Marxist, criminal media and an ocean of Leftist lies.

    The U.S. is sinking in the quicksand of the Swamp.

  2. makati1 on Tue, 6th Oct 2020 4:41 am 

    Although I have not voted in at least 30 years, I am rooting for Trump. He has the best chance of bringing the US down and outing all of the DC Deep State whores.

    GO TRUMP!

  3. Abraham van Helsing on Tue, 6th Oct 2020 5:12 am 

    If white civilization has to have any future in North-America, then secession is the inevitable conclusion for any white-nationalist thinking individual.

    The alternative, a 1984-society dubbed by Orwell as “Oceania”, encompassing entire Anglosphere, complete with Gulags and guards-of-color to get “white supremacists” out of the way, is too horrible to contemplate, but at the same time a very realistic option and will materialize if whitey won’t revolt. The NSA and US big tech are standing by to deliver the spying work and enable such a sinister society.

    Although there is a lot to criticize about Trump, especially from an environmental perspective, he is over-all far better than the Dems alternative. Again, from a white-nationalist perspective, it is better to have a closet-white nationalist like Trump occupying the White House and at least somewhat control (parts of) the army, if the country begins to balkanize, in order to maximize the chances for whitey to escape from Washington.

    The times after November 3 are going to be “extremely interesting” (in the Chinese proverb kinda way), so interesting that if you set yourself behind your monitor in the morning, you would pray things have stayed the same like yesterday, if your monitor shows anything at all in the first place, that is.

    But even if the left would win in America, it means the end of the US as a super power. A country run by negroes and spics, led from behind by Jews, can only be a neo-Brazil at best. It may still a big power in the international arena, but no longer a hegemon and inside it will be a country where little works anymore, like the good old USSR of former fame.

    It would also mean that Europe, that has far more “identitarian reserves” (fascist alert!) than our notorious globalist Anglo friends, could finally team up with Russia, that since 1991 is impatiently waiting to be absorbed in the European world. In that case Orwell would be right after all and we get a world that consists of 4 parts: Greater Europe, China, Anglosphere, Islam, that is the 2nd map in this link:

    https://documents1940.wordpress.com/2017/09/26/which-future-world/

    For Europe this would be better than what we have now: an obliged membership of the post-1945 ZOG-empire. But the best option would be the first map, a successful escape of whitey from Washington, supported by PBM and the creation of a white culture circle surrounding the North Pole, with no Jews and a prominent role for Russia, more than sufficiently strong to contain China.

    Let’s hope for the best.

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