a saudi view on the future of oil
Last Updated : GMT 12:45:25
Emiratesvoice, emirates voice
Emiratesvoice, emirates voice
Last Updated : GMT 12:45:25
Emiratesvoice, emirates voice

A Saudi view on the future of oil

Emiratesvoice, emirates voice

a saudi view on the future of oil

Wael Mahdi

There is a simple way to understand how Saudi policymakers perceive the future of oil: Much is revealed by how the Kingdom builds its fiscal budget forecasts.
Bloomberg News reported last month, based on sources it did not name, that Saudi planners expect to see the first fiscal surplus in 2023 as oil revenues increase by a forecast 80 percent from 2017. 
Why is that? It is because they expect oil prices to average $75 and KSA’s production to increase to 11.03 million barrels a day from about 10 million in 2017.
What does this tell us about what the Saudis think about the future oil? There are three things that can be concluded.
The first is that, despite efforts to diversify the economy away from oil, Saudi Arabia will still rely on oil income. 
Based on the numbers quoted by Bloomberg, Saudi Arabia’s total revenues in 2023 will reach SR1,138 billion while government spending will reach SR1,134 billion. This means the surplus recorded will be around SR4 billion only.
Looking at the revenue numbers, SR801.36 billion of the total is expected to come from oil revenues and SR336.6 billion from non-oil sources, Bloomberg reported. This would be an increase from the SR256 billion in non-oil revenues the government expects for 2017. That would mark a significant improvement — but still not enough to free the economy entirely from oil sales. 
With this in mind, Saudi policymakers will still be concerned about the health of the oil market for years to come, even as they further diversify the economy. That will mean the Kingdom will work closely with other producers — as it is doing now — to restore the balance of the market.
Second, Saudi Arabia is bullish on oil prices as it expects to see them increase over the coming five years. But being bullish goes against the thesis nowadays that oil prices will stay “lower for longer.” So how can these two views be reconciled?
When analysts and oil executives like Bob Dudley, CEO of energy giant BP, refer to “lower for longer,” they are in fact referring to the environment in which they need to operate in order to make profit.
No one seems to expect that oil will go back to the $100 level in the foreseeable future. The reason for that is the ability of shale oil producers in North America, and a few others outside the Organization of the Petroleum Exporting Countries (OPEC), to pump more over the next five years.
Under the International Energy Agency’s “New Policies Scenario” published in November, which is based on existing legislation and announced policy intentions relative to emissions and climate change, the oil price should continue to rise toward $83 a barrel by the mid-2020s. 
Looking at the developments in the oil market, there is a chance that oil prices could go above $70 even before 2023.
Three factors support such an idea: The low levels of investments in oil and gas exploration and production since 2014; the healthy expected increase in demand for oil over the next five years; and the relatively low number of reserve discoveries.
The third conclusion about the Saudi view on oil is that policymakers see a need to increase production to historic levels in the future. Going from 10.058 million barrels per day in 2018 to an unprecedented average of 11.03 million barrels in 2023 shows that Saudi Arabia is ready to share the burden with other producers to meet future demand. For those who understand the nature of the business, this cannot be done without huge investments and that is why Saudi Aramco unveiled a plan to spend at least $300 billion over the next decade.
The future of oil prices and supply will rest on few producers and Saudi Arabia is one of them. Saudi policymakers are aware that despite all the talk of abundant supply from outside OPEC, the reality might be different and the global rate of new hydrocarbons discoveries illustrates that. 
Shale oil is bridging the supply gap for now but Aramco’s CEO said recently that he does not expect this to go on forever — and at some point there will be no more “sweet spots” to drill for. So the next five years might seem like “business as usual” for Saudi Arabia after all. Beyond that, no one can tell for sure what will happen.

 

GMT 17:34 2018 Thursday ,30 August

Can people be religious without being rigid?

GMT 17:17 2018 Thursday ,30 August

Turkey-US differences should not be allowed

GMT 15:35 2018 Wednesday ,29 August

Could EU recession lead to more protectionism?

GMT 15:24 2018 Wednesday ,29 August

We must remember the two sides of John McCain

GMT 15:14 2018 Wednesday ,29 August

The Putin Method: All Nice And Legal

GMT 14:47 2018 Wednesday ,29 August

The clear choices facing Iran

GMT 14:18 2018 Wednesday ,29 August

The Helsinki irony: When Trump and Assad both win

GMT 14:10 2018 Wednesday ,29 August

Between forming a cabinet and collapse in Lebanon

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

a saudi view on the future of oil a saudi view on the future of oil

 



Emiratesvoice, emirates voice Skincare PR Performance Full Year 2017

GMT 08:36 2018 Monday ,22 January

Skincare PR Performance Full Year 2017
Emiratesvoice, emirates voice New hunt for flight MH370 gets under way

GMT 10:28 2018 Wednesday ,24 January

New hunt for flight MH370 gets under way
Emiratesvoice, emirates voice Modern colorful bedroom renovation

GMT 12:12 2017 Thursday ,21 December

Modern colorful bedroom renovation
Emiratesvoice, emirates voice Five Saudi women pilots granted GACA licences

GMT 15:04 2018 Thursday ,30 August

Five Saudi women pilots granted GACA licences
Emiratesvoice, emirates voice Turkey detains dozens more

GMT 10:11 2018 Wednesday ,24 January

Turkey detains dozens more
Emiratesvoice, emirates voice The Rake announces editorial updates

GMT 12:47 2018 Tuesday ,16 January

The Rake announces editorial updates
Emiratesvoice, emirates voice Europe brings on charm and blue skies

GMT 06:02 2018 Tuesday ,23 January

Europe brings on charm and blue skies
Emiratesvoice, emirates voice Sophisticated Classic Dining Room Design Ideas

GMT 12:15 2017 Monday ,18 December

Sophisticated Classic Dining Room Design Ideas
Emiratesvoice, emirates voice Arab Coalition Forces kill scores of Houthi commanders

GMT 12:46 2018 Thursday ,30 August

Arab Coalition Forces kill scores of Houthi commanders
Emiratesvoice, emirates voice Amazon to open first cashierless shop

GMT 05:18 2018 Tuesday ,23 January

Amazon to open first cashierless shop

GMT 17:01 2018 Thursday ,30 August

Television reporter killed in Mexico

GMT 11:03 2018 Tuesday ,23 January

No end to eyesores at Taj Mahal

GMT 15:13 2017 Tuesday ,31 January

Novo Nordisk bets $145m on post-Brexit UK science

GMT 10:28 2018 Wednesday ,24 January

New hunt for flight MH370 gets under way

GMT 08:56 2016 Friday ,05 August

Anti-doping investigator McLaren attacks

GMT 16:19 2017 Tuesday ,19 September

All eyes on Suu Kyi as Myanmar leader breaks silence

GMT 14:29 2017 Monday ,20 February

Prepares to present her new collection

GMT 11:18 2018 Friday ,19 January

China says air quality 'improved' in 2017

GMT 15:41 2016 Tuesday ,21 June

IMF Urges Japan to Raise Consumption Tax to 15%

GMT 11:54 2012 Tuesday ,07 February

RTA adds more value

GMT 17:54 2017 Thursday ,19 January

Aubameyang nets again as Gabon draws with Burkina Faso

GMT 08:19 2017 Friday ,10 February

Sexual orientation plays

GMT 10:57 2013 Sunday ,21 July

NBAD\'s Mizaat Fund delivers 2.5%

GMT 22:41 2017 Wednesday ,07 June

HM the King to head to Egypt

GMT 09:33 2016 Tuesday ,19 April

Ethiopia sweep at Boston Marathon

GMT 00:47 2012 Tuesday ,28 February

Do we still need publishers?

GMT 00:15 2014 Saturday ,11 October

3 militants eliminated by army in Bouira

GMT 14:10 2012 Sunday ,04 March

I’m not exploiting the revolution

GMT 06:48 2017 Saturday ,18 February

Dominican journalists shot dead during live broadcast

GMT 00:26 2017 Monday ,09 January

Chelsea Beat Peterborough United 4 - 1 in FA Cup

GMT 19:32 2011 Thursday ,14 April

Gold climbs up on weak Dollar
Emiratesvoice, emirates voice
 
 Emirates Voice Facebook,emirates voice facebook  Emirates Voice Twitter,emirates voice twitter Emirates Voice Rss,emirates voice rss  Emirates Voice Youtube,emirates voice youtube  Emirates Voice Youtube,emirates voice youtube

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

Maintained and developed by Arabs Today Group SAL.
All rights reserved to Arab Today Media Group 2021 ©

emiratesvoieen emiratesvoiceen emiratesvoiceen emiratesvoiceen
emiratesvoice emiratesvoice emiratesvoice
emiratesvoice
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
emiratesvoice, Emiratesvoice, Emiratesvoice