Saudis see oil revenue jump by 2023 on production, price
riyadh — Saudi Arabia’s plan to erase its budget deficit by 2023 relies in part on a scenario that would see oil revenue surge by about 80 per cent, according to people with knowledge of the matter.
Under a six-year fiscal programme, officials predict rising oil prices and output will push income from oil sales to 801.4 billion riyals ($214 billion) from 440 billion riyals this year, the sources said. It assumes the price of oil will reach $75 a barrel. Non-oil revenue, excluding income from the Public Investment Fund, would increase 32 per cent to 337 billion riyals, they said.
The forecasts show how essential crude prices are to repair public finances even as Crown Prince Mohammed bin Salman tries to prepare the kingdom for the postoil era. The kingdom has led a drive among major non-Opec members to stabilise oil markets through production cuts that have helped Brent crude prices gain 17 per cent this year to $66.87 a barrel on Wednesday.
The oil revenue forecast “looks challenging given the development in the shale industry,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “The strong oil revenue growth in 2017 will be difficult to repeat.”
Authorities expect oil production to increase from an average of 10 million barrels a day this year to 11.03 million barrels in 2023. For 2020, they predict output of 10.45 million barrels a day, generating 605 billion riyals in revenue, the people said.
A gas flame is seen near the Khurais oilfield. Saudi Arabia assumes its oil production to increase from an average of 10 million barrels a day this year to 11.03 million barrels in 2023.
is saudi arabia’s projected income from oil sales by 2023
The scenario may signal that the world’s biggest oil exporter doesn’t currently see a need to extend the agreement to cut production beyond 2018 as a global supply glut eases.
Easing austerity “could prove premature if oil prices disappoint,” Jean-Michel Saliba, an economist at BofA Merrill Lynch in London, wrote in a report last week. “Energy policy is likely to remain focused on supporting the oil market rebalancing and enabling the government’s shift to boost growth near-term.”
The Tadawul All Share Index gained 0.3 per cent at 11.05am in Riyadh.
Top Saudi officials last week rolled out an expansionary budget for 2018 to revive an economy battered by austerity and low oil prices. Gross domestic product contracted 0.5 per cent in 2017.
A document outlining some details of the fiscal programme and — Reuters published by the Saudi Press Agency showed authorities expected non-oil economic growth to stay above three per cent through 2020 from 1.5 per cent this year. The document has since been deleted from the agency’s website.
Economy Minister Mohammad Al Tuwaijri, speaking after the budget release, said the kingdom “found it appropriate to move to a more optimistic scenario” in fiscal planning. “We’re very satisfied with what happened in 2017, and we’ll continue on this journey.”
The budget deficit narrowed to about nine per cent of GDP this year. — Bloomberg