Saudi Arabia Hikes Petrol Prices By 40% At The Pump

The kingdom sold bonds this year for the first time since 2007 to help shore up its finances. The International Monetary Fund had projected a deficit of $130bn.

The budget is the first under King Salman, who took over at the helm of the monarchy in January.

As a results, cuts are coming: The budget calls for a 14% reduction to 840 billion riyals ($224 billion U.S.), down from 975 billion ($260 billion U.S.).

Oil revenues, which make up 73% of the total revenue figure for 2015, are down 23% compared with 2014 at 444.5 billion riyals.

“Considering the price of oil has declined about 37 percent from the beginning of the year, cutting back expenditure by 2 percent is not a bad sign”.

In its budget statement, the ministry said it would adjust subsidies for water, electricity and petroleum products over five years.

The country’s Income fell a full 42% from the previous year.

Prices will also increase for electricity, water, diesel and kerosene under the cuts decided by the council of ministers headed by King Salman, the official SPA news agency reported.

The price of higher-grade unleaded petrol will rise to 0.90 riyals ($0.24) per litre from 0.60 riyals, a hike of 50 per cent. Lower-grade petrol will hike to 0.75 riyals from 0.45 riyals per litre, up two thirds.

Seeking to ward off future fiscal crises, the ministry of finance confirmed wide-ranging economic reforms, including plans to “privatise a range of sectors and economic activities”.

Most of this was, however, shipped overseas by their JV partners, leaving the country a net importer, with an average of 744,784 mt of gasoline imported each month this year, according to Joint Oil Data Initiative data.

Jadwa Investment estimated the cost of energy subsidies in Saudi Arabia at $61 billion in 2015, of w …

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.

Novak said a between supply and demand may occur during the second half of 2016, but added “New production in Iran [post sanctions] may affect the market”.

Reduced oil revenues are eating into defence budgets in the Gulf region, the world’s fastest-growing arms market.

The majority of the increase in overall spending was on salaries to Saudi civil and military employees.