Saudi Arabia expects oil revenue to jump 12 percent next year in a sign the world’s biggest crude exporter expects prices to keep rising.
The top OPEC producer expects to collect 492 billion Saudi riyals (US$131.2 billion) from oil sales next year, compared with 440 billion riyals this year, the Saudi Arabian Ministry of Finance said in a budget statement on Tuesday.
Non-oil revenue is expected to climb from 256 billion riyals this year to 291 billion riyals.
Oil is on course for a second annual gain after OPEC and its allies agreed to extend production curbs through the end of next year.
Compliance with OPEC cuts rose to 115 percent last month, the highest since the agreement took effect in January, the International Energy Agency said.
Brent crude was yesterday trading at US$63.98 per barrel at 10:57am in Dubai, United Arab Emirates, up 13 percent this year.
“Assuming Saudi Arabia will continue to comply with the OPEC production cuts throughout 2018, the budgeted increase in oil revenue reflects an expectation of higher export prices,” Bloomberg Economics Middle East chief economist Ziad Daoud said.
Higher exports or an increase in oil prices can help to balance the budget, Daoud added.
Next year’s budget is based on an oil price of about US$63 per barrel, Bloomberg Economics said.
Iraq, OPEC’s second-biggest producer, is assuming US$46 per barrel for its budget next year, pending legislative approval, up from US$42 per barrel for this year.
Qatar’s budget for next year assumes US$45 per barrel, while Iran expects to earn US$33 billion from oil sales at US$50 per barrel.
The Saudi Arabian government relies heavily on oil sales for revenue and its finances have taken a blow since prices started tumbling in 2014.
The country’s oil exports dropped from 8 million barrels per day at the end of last year to 6.8 million barrels per day in October.
Saudi Arabia stands to benefit from the rise in oil prices. Revenue next year is projected to total 783 billion riyals, up from 696 billion riyals this year.
The government intends to spend 978 billion riyals next year, compared with 926 billion Saudi riyals this year, the ministry said.
The kingdom last year implemented austerity measures to weather the downturn.
In April, Saudi Crown Prince Mohammed bin Salman rolled out the Saudi Vision 2030, an economic plan to end the country’s “addiction” to oil.
The country intends to sell a stake of about 5 percent in state energy producer Saudi Arabian Oil Co, the world’s biggest oil exporter.
The ministry’s budget statement on Tuesday showed that Saudi Arabia is extending its timeline to cut energy subsidies as the government seeks to offset the impact of austerity measures on the stagnating economy.
Domestic gasoline prices are now expected to reach parity with international levels gradually between next year and 2025 — compared with the previous target of 2020, the statement said.
The plan is subject to change according to fiscal developments, the ministry said.
The government is planning to raise local gasoline prices by about 80 percent next month, a person with knowledge of the matter said earlier this month.
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