Saudi oil income seen down by 19%

Lower oil production will ally with a decline in average prices to depress Saudi Arabia’s crude export earnings by nearly 19 per cent in 2013 but the budget will remain in surplus, according to a key Saudi investment firm.

The world’s largest oil exporter earned a record high $347 billion (Dh1.27 trillion) from crude sales in 2012 and the earnings are projected to shrink to nearly $279 (Dh1.024 trillion) billion in 2013, the Riyadh-based Jadwa Investments said in its monthly bulletin.

The 2013 income is also below the 2011 earnings of around $317 billion but will be above the 2010 income of $215 billion and far higher than in 2009, when lower output and prices depressed the Gulf Kingdom’s oil revenues to $163 billion.

Jadwa said the decline this year would be a result of a fall in the country’s crude production to an average 9.6 million barrels per day in 2013 from a record high of 9.8 million bpd in 2012. The average price of Saudi crude is also projected to recede from its peak of $106 a barrel in 2012 to around $99.5 this year.

Despite the fall, Saudi Arabia will record a relatively large fiscal surplus of around SR178 billion, much higher than the budgeted balance of SRnine billion but far below the 2012 surplus of SR386 billion, according to the report.

It showed the surplus would be achieved because of a sharp rise in actual revenue to SR1,047 billion against budgeted revenue of SR829 billion.

But the report also expected Riyadh to overshoot expenditure again this year to around SR870 billion compared with budgeted spending of SR820 billion.

It said high public spending would ally with growth in non-hydrocarbon sectors to boost Saudi Arabia’s real GDP by around 4.2 per cent in 2013 despite lower oil output. The report noted growth this year would be below the rate in 2012 and 2011 when it stood at as high as 6.2 and 8.7 per cent respectively.

Growth this year would be stoked by the non-oil sector, which is forecast to expand by about 6.3 per cent, Jadwa said, adding that the oil sector would shrink by 1.5 per cent.

In current prices, Saudi Arabia’s GDP, the largest in the Arab world, would grow by around 3.3 per cent to an all time high of SR2,819 billion in 2013 from SR2,727 billion in 2012. It would swell further to SR2,905 billion in 2014, the report said.


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