Saudi Arabia, the Middle
East's biggest economy, has based its record budget for next year on an average
crude oil price of about $58 a barrel, people familiar with the matter said
Wednesday.
"Yes, it $58 a barrel, which is lower than the expected average for next
year," one person told Zawya Dow Jones.
Several banks earlier this month significantly boosted their expectations for
the price of a barrel of oil in 2011, with some seeing it averaging $100 next
year and $120 by the end of 2012. Noting that world oil demand came
"roaring back" in 2010, Goldman Sachs projected 2011 average prices
of $100 a barrel on the strength of "sustainable" petroleum demand
growth.
"The government is using a conservative oil price assumption of about $58
per barrel of WTI on production of 8.7 million barrels per day to determine its
budget, according to our estimates," said John Sfakanakis, Riyadh-based
chief economist at Banque Saudi Fransi.
"Higher actual oil prices enabled Saudi Arabia to post a substantial
surplus in 2010 of SAR108.5 billion after recording its first deficit for seven
years in 2009," he added.
Saudi Arabia
Monday unveiled a budget projecting a 40 billion Saudi riyal ($10.7 billion)
deficit as the government continues its public spending drive in a bid to boost
economic growth.
The new budget, which is set to focus again on education, health and
infrastructure projects, estimates record expenditure of SAR580 billion in 2011, a 7.4% increase on
the kingdom's 2010 budget.
Saudi Arabia,
which has filled its coffers with surplus income from oil exports this decade,
has drawn on its reserves to fund record budgets and keep its $400 billion,
five-year infrastructure development program on track.
The kingdom like the other members of the Organization of the Petroleum
Exporting Countries, or OPEC, is subject to the group's output limits and saw
its crude output fall after the cartel announced supply curbs of 4.2 million
barrels a day in December 2008.