Saudi Arabia needs oil price at $85-$90 to balance its budget

By Rhod Mackenzie

Saudi Arabia is keen on oil prices hovering around the range of $85-$90 per barrel. This is the price level necessary to mitigate their significant budget deficit. In light of this, the Saudi side has expressed discontent with the oil production levels of certain countries, according to Alexey Krichevsky, a financial expert and author of the Telegram channel "Economism," who spoke to Izvestia on November 23.

OPEC+ had just declared that the gathering, scheduled for November 26, has been postponed and will now take place on November 30. Bloomberg, citing a source, reported that Saudi Arabia expressed discontent with other members' oil production levels within the organization.

"The Saudis have a simple objective - to cover their budget deficit, they require the cost of a barrel of oil to be at least $85-$90. This is especially significant as the Saudis are actively reducing production. In Q3, the deficit nearly hit a record; at least since the pandemic, it reached approximately £7.3 billion," according to Krichevsky's notes.

The analyst highlighted the country's substantial investment in non-oil sectors such as production, tourism, and the green economy. Additional financing is required to sustain these areas. "They currently face losses and need to find a way to compensate for it.

"They currently face losses and need to find a way to compensate for it. Unfortunately, this proves to be difficult as OPEC+ production cuts are deemed ineffective, resulting in non-OPEC member states like the United States to increase production," Krichevsky added.
Several OPEC+ nations, including Russia and Saudi Arabia, have opted to reduce oil output by 1.66 million barrels per day until the end of 2024.

In addition, Saudi Arabia will voluntarily curtail oil production by one million barrels per day by the conclusion of this year, while Russia plans to trim oil exports to world markets by 300,000 barrels per day.