Saudi Arabia: Breakeven Oil Price
The oil price Saudi Arabia needs to achieve to fully fund its budget is called the Fiscal Breakeven Oil Price. This figure changes annually based on government spending plans and non-oil revenues.
Here are the key estimates for the price per barrel needed to balance the budget, covering all expenditures including public services, subsidies, and the costs associated with the vast royal family and ongoing economic diversification projects (like Neom):
Why the High Price?
The high breakeven price is necessary for several reasons:
- Social Contract: To maintain stability, the government provides extensive subsidies (fuel, water, electricity), high-paying public sector jobs, and housing support to the Saudi population.
- Vision 2030: The Kingdom is heavily investing in diversifying its economy away from oil, requiring massive spending on futuristic projects like Neom, which drives up the required revenue.
- Oil Production Cuts: Saudi Arabia has often cut its oil production as part of OPEC+ agreements to support prices. While this raises the price, it reduces the total volume sold, meaning a higher price is needed for each barrel to cover the budget gap.
In summary, while the core budget might be covered in the $90s, meeting all the ambitious investment goals and maintaining the current spending pace likely requires oil prices closer to $100 to $112 per barrel.
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Totally illogica at arriving at fuel prize. India can set similar prize for its spices & other products include pharmacy to include costs of next 50 years & charge importing countries today
It is Middle East country problems to cut or source separately for its futuristic projects & not demand it as its birth right when selling crude oil.
The cost of doing business in UAE is too high. Rest is all hype that it is gold on the streets of Dubai or Abu Dhabi. Total Hype & nonsense, selling dreams but factually nothing on ground.