Saudi Arabia is expected to see its oil revenues surge by 66 percent this year to around $249 billion on the back of higher oil prices and rising oil production as part of the OPEC+ agreement, Riyadh-based Jadwa Investment said on Wednesday.
"As oil prices remain elevated, and Saudi crude oil production rises in line with the Opec+ agreement, we expect government oil revenue to continue showing sizeable yearly rises," Asad Khan, chief economist and head of research at Jadwa Investment, wrote in a research note carried by The National.
Oil prices above $100 a barrel contribute to high export revenues for the world's largest crude oil exporter and raise significantly the royalties and income tax Saudi Arabia's Finance Ministry receives from oil production activity.
Jadwa Investment expects Saudi Arabia to start raising government expenditures in the coming quarters, especially for programs part of its Vision 2030 strategy.
The Saudi economy is set for stronger performance this year than previously expected amid high oil prices, the International Monetary Fund (IMF) said last month, revising its growth forecast to 7.6% for 2022, up by 2.8 percentage points from the previous estimate.
For the first quarter alone, Saudi Arabia recorded its highest economic growth rate in the last ten years, at 9.6% compared to the same quarter of 2021, according to flash estimates by the General Authority for Statistics, which attributed the growth to oil activities and exports.
Moreover, Saudi Arabia booked a budget surplus of $15.3 billion (57.491 billion Saudi riyals) in the first quarter, the ministry of finance said earlier this week. Oil revenues soared by 58 percent to $49 billion (183.7 billion Saudi riyals) between January and March when oil prices surged to above $100 a barrel, the finance ministry data showed.
Higher oil prices prompted Fitch Ratings last month to revise its outlook on Saudi Arabia's Long-Term Foreign-Currency Issuer Default Rating (IDR) to Positive from Stable, expecting budget surpluses for the Kingdom in 2022 and 2023 for the first time since 2013. Still, Saudi Arabia's high dependence on oil for economic growth and budget income remains a rating weakness, Fitch said.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More