RIYADH: A combination of massive currency reserves and a 2013 spending plan based on a conservative oil price projection means Saudi Arabia has considerable flexibility in deciding its oil output policy this year.
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The Kingdom has boosted state spending sharply in the past couple of years, adding hundreds of thousands of public sector jobs, introducing new social entitlements and starting big infrastructure projects.
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Many economists agree this largesse will pose fiscal challenges for Riyadh in future. But for now, the government’s strong budget position means it can opt either to cut oil output in support of prices, or withstand a fall in prices to maintain market share versus rival producers.
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“It gives them a little bit of comfort in their policies,” said Alexander Poegl, business development manager at JBC Energy in Vienna, which does consulting work for the Saudi oil sector.
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He said Saudi Arabia’s priority was to pursue a middle way in the energy market, trying to maintain stability of prices and supply.
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Read more: http://www.arabnews.com/saudi-arabia-%E2%80%98still-very-comfortable-fiscal-position%E2%80%99
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