Saudi Arabia raises fuel prices, still 50% of what Nigerians pay

According to the KSA Ministry of Finance’s annual budget report for 2016, actual expenditure for the 2015 fiscal year is expected to reach SR 975 billion, representing an increase of 13 per cent of the estimated budgeted spending, and an expected deficit of SR 367 billion, according to the report.

Oil prices have fallen by more than half ever since that November 2014 decision, with Brent crude, the global benchmark, trading at about $37 a barrel on Wednesday in London, its lowest level since the 2008-09 financial crisis.

The dive is largely due to Saudi Arabia’s own policies and those of other OPEC nations, who are refusing to cut oil production as they seek to drive less-competitive players, including U.S. shale producers, out of the market. The 2015 budget was based on a Brent price of $47 a barrel and the same level of crude exports, he said. The kingdom ran a deficit of almost $98 billion in 2015, according to the Council of Economic and Development Affairs, Reuters reported Monday.

Separately, nonoil revenues increased by 29 percent to SR163 billion.

Revenue from oil sales in the kingdom will make up about 70 percent of the budget next year, John Sfakianakis, a Riyadh-based economist and a former adviser to the government, said by phone.

Saudi Arabia says it expects to spend $224 billion (840 billion riyals) in 2016, which is $5 billion (20 billion riyals) less than what had been projected for this year.

Humbled by the slumping oil price, Saudi Arabia, long the world’s major oil producer, has been forced to take an axe to government spending by slashing a host of subsidies – including the price of oil.

Subsidies for water, electricity and petroleum products would be adjusted over five years, said the ministry.

The people of Saudi Arabia will now be subjected to higher utility costs as subsidies will be removed to decrease expenses.

The price of 95 RON gasoline was raised by 50% to Riyal 0.9 ($0.24)/liter, while that of 91 RON gasoline was raised by 66.67% to Riyal 0.75/liter.

The supply glut is expected to continue in 2016, as Iran has pledged to add an additional 0.5 million barrels per day into the market once Western sanctions are lifted.

Spending on military and security projects reached 20bn riyals in 2015, Saudi Arabia said, following its intervention in Yemen as well as action against militant group Islamic State.