Saudi Arabia to hike domestic petrol prices by 50%

The situation is so bad that the Saudi government said petrol prices, which are usually very cheap in Saudi Arabia because of the glut of oil the country produces, may increase by 50%; and diesel, electricity, and water prices will also increase to help offset the drop in foreign revenues. A brutal sell-off in commodity prices has taken its toll on the Gulf state, which has been dependent on oil for more than three-quarters of its revenues. The country requires US$100 a barrel oil to balance the budget.

He said Saudi Arabia had increased its military and security spending in 2015 by about 20 billion riyals because of the conflict.

Authorities announced other measures aimed at reducing Saudi Arabia’s reliance on oil revenues by diversifying the economy, including by increasing charges on public services.

Analysts said they saw positives in the budget announcement; the 2015 deficit of 367 billion riyals ($97.9 billion) was lower than the 400-450 billion riyals which many investors had feared, and the planned cut in 2016 spending was smaller.

Revenues were estimated to be at 608 billion riyals ($162 billion), well below projections and the 2014 income, while spending came in at 975 billion riyals ($260 billion), ministry officials announced at a press conference in Riyadh.

The government also said it was hiking prices for fuels, water and electricity as well as gas feedstock used by industry, as part of politically sensitive subsidy reforms. That’s where the global oil reality is going.

The kingdom has led the Organization of Petroleum Exporting Countries to decide on December 4 to abandon the group’s limits on output amid efforts to squeeze higher-cost producers such as Russian Federation and US shale drillers out of the market.

Falih said the policy had borne fruit.

“Supply has plateaued in North America and [is] declining by significant amounts”. Brent for February settlement fell $1.17, or 3.1 percent, to $36.72 a barrel on the London-based ICE Futures Europe exchange.

Aramco, the national oil conglomerate said on twitter that all petrol stations will close with immediate effect on Monday till midnight, and will resume with new prices.

“We do not see Saudi Arabia… cutting production in order to support upward movement in prices”. When oil prices steeply dropped in 1986, Saudi Arabia ran a budget deficit for some 15 years, significantly increasing public and external debt until oil prices finally recovered in the 2000s.