Saudi oil income to fall by $68bn in 2013

Saudi Arabia netted its highest income from oil exports in 2012 because of a surge in production and prices but the earnings are projected to dive by nearly $68 billion in 2013, according to a key Saudi investment firm.

Although the world’s dominant oil supplier and largest Arab economy has approved a record high budget for 2013, its foreign assets will still swell by about $47 billion this year to maintain its position as having the largest official reserves in the Arab world.

Higher output and prices boosted the Gulf Kingdom’s oil export earnings to an all time high of around $347 billion (Dh1.3 trillion) in 2012 but the income is forecast to tumble to nearly $279 billion (Dh1.03 trillion) this year, the Riyadh-based Jadwa Investments said.

It based its projections on an expected fall in the country’s oil output to 9.6 million barrels per day in 2013 from 9.8 million bpd in 2012 and a decline in the price of Saudi crude to an average $99.4 from $106.1.

But Jadwa, in its monthly economic bulletin, expected Riyadh’s foreign assets to continue their rise through 2013 to peak at around $695 billion (Dh2.57 trillion) at the end of the year compared with $648 billion (Dh2.39 trillion) at the end of 2012.

The increase will be far below that in 2012, when the assets swelled by around $114 billion (Dh421 billion) after oil prices climbed to their highest average.

In 2011, SAMA’s assets leaped by about SR352 billion as a result of high oil prices and a sharp rise in the Kingdom’s crude output to an average 9.3 million bpd from around 8.2 million bpd, an increase of 1.1million bpd.

It was the biggest annual increase in the assets since 2008, when they rocketed by a whopping SR513 billion mainly because of a 50 per cent rise in crude prices that allowed the country to record its highest fiscal surplus of SR580 billion.

Jadwa also expected a tiny budgeted surplus to rocket to nearly SR178 billion at the end of 2013 despite a projected surge in expenditure.

Buoyed by strong oil prices, Saudi Arabia announced a record high budget of SR820 billion for 2013 and analysts expect actual spending to end the year much higher as was the case in previous years.

Revenues were put at SR829 billion, leaving a budgeted surplus of SRnine billion.

Jadwa forecast real revenue at SR1,047 billion and spending at around SR870 billion. It said the surplus this year would account for around 6.3 per cent of GDP compared with  nearly 14.2 per cent in 2012.