This article was published May 5, 2020. This article does not mention the $75 billion in dividend Saudi Aramco must pay Saudi Arabia each year for the next five years.
It’s a year of carnage for oil nations. But at least one will emerge from the pandemic both economically and geopolitically stronger.
With 4 billion people around the world under lockdown as the coronavirus pandemic grows, demand for gasoline, jet fuel, and other petroleum products is in freefall, as are oil prices. The price of a barrel of crude has been so low in the United States that sellers recently had to pay people to take it off their hands. As a result, oil-dependent economies are reeling.
In the United States, the largest oil producer in the world, the number of rigs drilling for oil has plummeted 50 percent in just two months, almost 40 percent of oil and gas producers could be insolvent within the year, and 220,000 oil workers are projected to lose their jobs.
Around the world, petrostates from Nigeria to Iraq to Kazakhstan are struggling and their currencies tanking. Some, like Venezuela, face an economic and social abyss.
While 2020 will be remembered as a year of carnage for oil nations, however, at least one will most likely emerge from the pandemic stronger, both economically and geopolitically: Saudi Arabia.
First, Saudi Arabia is proving that its finances can weather a storm such as this. Low oil prices are, of course, painful for a country that needs around $80 per barrel to balance its public budget, which is why Moody’s cut Saudi Arabia’s financial outlook last Friday.
Saudi Arabia ran a $9 billion deficit in the first quarter of 2020. Like other nations, the kingdom has also seen tax revenues fall as it imposes economic restrictions to halt the pandemic’s spread. Last week, the Saudi finance minister said that government spending would need to be “cut deeply” and some parts of the kingdom’s Vision 2030 economic diversification plan would be delayed.
Much more at the link, but behind a paywall.
The article does not mention the amount of money Saudi Arabia must spend each year for imports.
Since the above article was published in May, 2020, these articles:
- OPEC basket in free fall;
- Existential crisis for the House of Saud; squeezing a cash cow to stay afloat; Vision 2030 (almost) dead; reserves and import requirements; foreign exchange reserves, lower for longer;