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Saudi Arabia cuts budget deficit as oil revenue rises despite war

Saudi Arabia’s oil sector contracted about 25% in the quarter, but higher crude prices lifted oil revenue 28% while spending fell 3.5%.

Reported · Written up by our desk · Energy

Saudi Arabia’s second-quarter finances improved even as the war disrupted its oil industry, OilPrice reported. The kingdom posted a 34.3-billion riyal, or $9.1-billion, budget shortfall for the three months through June, down from 125.7 billion riyals in the first quarter, according to the finance ministry.

OilPrice said oil revenue rose 28% quarter over quarter as crude prices jumped, while spending fell 3.5%. The outlet attributed the downturn in production to Iranian attacks and the closure of the Strait of Hormuz, which left Saudi oil output well below prewar levels.

Despite the volume hit, Saudi Arabia boosted pricing by redirecting crude through pipelines to the Red Sea port of Yanbu, allowing it to sell fewer barrels at higher prices. OilPrice added that the oil sector contracted almost 25% during the quarter, weighing on the broader economy.

OilPrice noted that Saudi Arabia’s budget still remains unbalanced, and EFG Hermes estimates the kingdom now needs oil near $115 per barrel to cover spending, up from about $96 last year. Brent was trading near $90 per barrel Thursday, the outlet said, and is up more than 47% this year.

Latest closeWTI crude $84.21 ▼0.3%|Brent $89.45 ▼1.4%

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