Saudi oil receipts drop to a three-year low

CFOTO/Sipa USA via Reuters Connect

• Receipts fall by 9% to $17.7bn
• Exports also show small drop
• Saudi budget deficit to increase

Sales of Saudi Arabian crude oil and refined products fell to a three-year low in June as a result of a drop in prices and ongoing cuts in production instigated by the kingdom.

Receipts from shipments for the month were down to $17.7 billion – a fall of more than 9 percent year on year and 12 percent month on month – according to figures released by the General Authority for Statistics.

The government body revealed the percentage of oil shipments out of total exports decreased from 77.4 percent in the second quarter of 2023, to 75 percent for the corresponding period this year.

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With oil prices down from the $80+ of last year and hovering between $75 and $80 per barrel and production dipping to nine million barrels per day, Saudi Arabia faces rising fiscal pressure. 

The International Monetary Fund estimates that the kingdom, the world’s largest oil producer, requires a price of $96 per barrel in order to balance its books.

The country’s budget deficit is forecast to widen to 4.3 percent of GDP this year, compared with 2 percent last year, driven largely by increased spending and lower oil revenues.

According to flash estimates released by GASTAT, Saudi Arabia’s real gross domestic product (GDP) contracted by 0.4 percent in the second quarter of this year compared to Q2 2023. 

The decline was primarily driven by the decrease in oil activities by 8.5 percent. In contrast, non-oil activities increased by 4.4 percent, and government activities were up by 3.6 percent on an annual basis.

• Saudi export financing grows while trade deficit widens
• Tourist spending in Saudi Arabia hit new high in 2023
• Saudi capex expected to shift focus to renewables

Lacklustre growth in the Chinese economy has caused Opec to trim its bullish forecast for growth in international oil demand this year. 

The oil producers’ group said on Tuesday that it was cutting its expectation for growth in demand by the world economy by 6 percent, or 135,000 barrels per day (bpd), to 2.1 million bpd for 2024.