Saudi Arabia bases its 3-year budget on oil price of $ 50 per barrel – Goldman Sachs

Saudi Arabia bases its 3-year budget on oil price of $ 50 per barrel – Goldman Sachs

Saudi Arabia bases its 3-year budget on oil price of $ 50 per barrel - Goldman Sachs

Saudi Arabia's finance ministry base its budget for the next three years on an oil price of around $ 50 a barrel, according to an analysis by Goldman Sachs, which examined the financial plan. “Using our own estimates of the distribution of government revenues, we have calculated that the data presented in the draft budget is based on an average oil price of about $ 50 per barrel between 2020 and 2023,” said London-based analyst at Farouk Soussa Bank.

The Kingdom, as a rule, adheres to a rather conservative view of oil prices in budgeting and does not disclose its assumptions about their level, Bloomberg notes.

Quotes of December futures for Brent on the London ICE Futures exchange on Monday grow by 3.4% – to $ 40.58 per barrel. The price of WTI futures for November in electronic trading on the New York Mercantile Exchange rises by 3.8% – to $ 38.47 per barrel.

Thus, the Saudi Ministry of Finance expects the price to rise by about a quarter from current levels. However, this is still not enough for the country's budget to be balanced. According to the International Monetary Fund, for this, quotations should be at least $ 66 per barrel. Before the start of the pandemic, oil prices were around $ 65 per barrel.

Goldman Sachs' calculations almost coincided with the data of the Cairo investment bank EFG Hermes, which earlier stated that Saudi Arabia proceeds in its budget from the oil price of $ 50-55 per barrel.

At the same time, Goldman Sachs analysts are more optimistic about the prospects for the oil market and predict an increase in the price of Brent to $ 65 per barrel by the end of 2021.

Saudi Arabia officials said last week that the country's budget deficit will fall to 5.1% of GDP next year, down from 12% in 2020, thanks to spending cuts.

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