‘Saudi Arabia mulls 80pc hike in local fuel prices’

KUWAIT: Saudi Arabia is considering a plan to raise domestic prices for petrol and jet fuel in November at the latest, as the world’s biggest oil exporter pushes a programme to curtail spending and reduce dependence on crude after a slump in prices.

The government would boost petrol to parity with varying international prices under the plan, according to a person with knowledge of the matter.

At current price levels, this could result in a hike for octane91 grade petrol to about 1.35 riyals per litre (RM1.50) from 0.75 riyals, or an increase of about 80 per cent.

Energy-subsidy reform is a key part of Saudi Arabia’s restructuring programme, along with the sale of stakes in state-owned entities, including the world’s biggest crude exporter Saudi Saudi Arabian Oil Co (Aramco).

The kingdom, the largest Arab economy, raised fuel prices in December 2015 and announced plans for further increases. However, a 0.5 per cent shrinkage in gross domestic product in the first quarter revealed the scale of the challenges the government may face as it seeks to overhaul an economy still reliant on a struggling oil industry.

The neighbouring United Arab Emirates, the second-biggest Arab economy, became the first country in the oil-rich Persian Gulf region to remove subsidies on transport fuel when it began linking petrol and diesel prices to global oil markets in 2015.

Petrol and jet fuel would undergo immediate, one-time increases under the Saudi plan, while the government would raise prices of other fuels gradually between 2018 and 2021, the person said. Bloomberg