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Saudi Arabia 2015 state budget assumes oil price around $60

Saudi Arabia 2015 state budget assumes oil price around $60

RIYADH: Saudi Arabia’s 2015 state budget assumes an oil price close to current levels of around $60 a barrel for Brent crude, a shift from past budgets which were based on prices well below market levels, analysts say. For the 2015 budget, announced on Thursday, four analysts’ oil price estimates are in a range of $55 to $63.

Oil prices have plunged almost 50 percent since June, pressuring the finances of producer countries such as Saudi Arabia, the world’s largest oil exporter.Its 2015 budget plan projects record spending of $229.3 billion, up 0.6 percent from the 2014 budget, while total revenues are projected to drop to $190.7 billion — leaving a $38.6 billion deficit.

The kingdom doesn’t reveal the oil prices which it uses to calculate its annual budgets. So analysts estimate them, making assumptions about several other variables such as planned oil exports and production for the following year.

That does not mean Saudi Arabia necessarily expects such prices next year — Finance Minister Ibrahim Alassaf said on Thursday there was a great difference of opinion over when prices would start rebounding, with some people predicting the second half of next year and others 2016.

Instead, the budgeted oil price is an accounting assumption which the government uses to set a baseline for next year’s revenues. If Brent crude averages more than $60 next year, Saudi oil revenues will probably be larger than projected; if Brent is below $60, revenues will be smaller.