Saudis plan new export cuts in hopes of lifting oil to $80 a barrel
Almaty. January 8. KazTAG - Saudi Arabia is planning to cut crude exports to around 7.1 million barrels a day by the end of January in hopes of lifting oil prices above $80 a barrel, according to OPEC officials, reports the Wall Street Journal.
The new strategy comes as the kingdom seeks to cover a large government spending boost. It said last month that it planned to increase its expenditures by 7% in 2019—the equivalent of about $20 billion—as the country struggles to fund ambitious plans to diversify its economy beyond petroleum products.
Crown Prince Mohammed bin Salman, the de facto Saudi ruler, has faced a sharp decrease in oil prices since October amid a supply glut. The brutal killing of journalist Jamal Khashoggi by Saudi operatives in October has also deterred foreign companies from working in the kingdom and investing in its economic development plans.
The new Saudi budget requires oil prices to rise to as much as $95 a barrel, according to an official with the Organization of the Petroleum Exporting Countries. But the kingdom would be satisfied with prices at $80 to $85 a barrel, a range that would limit its need to dip it into its financial reserves, according to people familiar with its thinking.
To cover proposed expenditures, Riyadh is set to reduce crude exports by up to 800,000 barrels a day from November levels.
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