The price of fuel will rise and is expected to be announced by the end of 2016. Saudi Arabia is planning to deviate from dependence on oil revenue. The Kingdom of Saudi Arabia is the 14th largest country in the world covering approximately two million square kilometers and is the second major OPEC Member Country. Saudi Arabia is the largest exporter of petroleum worldwide owning about 18 percent of the petroleum reserves of the world. The oil and gas sector accounts for about 50 percent of the Kingdom’s GDP, and about 85 percent of export incomes. Recommended: 8 Important Points about Saudi Budget 2017, everyone should know
Crude Oil Production in Saudi Arabia has increased to 10,720 barrels per day in November from 10,625 in October of 2016 which is all time high. Crude Oil Production in Saudi Arabia averaged to 8,015.11 from 1973 until 2016. The officials of Saudi Arabia are thinking to increase the retail prices of gasoline and diesel in 2017, as the world’s top crude oil exporter wants to follow a plan to cut its reliance on oil revenue. It is expected that this news of the increase in prices of fuel will be announced before the end of this year. The plan or consideration is not yet official nor public so the name of the person who disclosed the news is hidden.
The representative said that there are two options on which the government is thinking, one being trying to connect the local fuel prices to standard oil prices or to bring it in accordance with the gasoline and diesel fuel prices in the international market. Media representatives in ministry of Riyadh were not present to give remarks on it Saudi Arabia, the country with the biggest economy in the Middle East, is focusing on balancing and controlling the dependence on energy after the drastic drop in oil prices for past two years.
Last year, they took the extraordinary step of dropping fuel subsidies and increased the retail price of gasoline to 50 percent. The Kingdom is expecting to sell its shares to its own state companies which include Saudi Arabian Oil Co., known as Aramco. For Arab Light crude to Asia, Aramco raises its official retail price by 90 cents per container, to 20 cents less than the regional level. The price of Brent crude has jumped 49% in 2016.
Mohammed Ramady, an independent analyst and a teacher of economics at King Fahd University of Petroleum and Minerals said that this is something the Saudi government seems dedicated to carrying out to downsize the domestic demand against the loss in earning from sales of subsidized fuel. But it is very important that well-managed funding system is protecting the lower sections of the society.
The retail price of gasoline was increased from 0.45 riyals/liter to 0.75 riyals/liter (20 cents) for 91-octane fuel, and from 0.6 riyals/liter to 0.9 riyals/liter for the 95-octane grade on December 28, 2015. The government ‘s five-year plan was to reduce subsidies so they also raised diesel, natural gas, ethane, diesel, kerosene, electricity and water prices. By the end of the year 2016, the price for 91-octane is expected to increase to SR 0.975 and the price of 95-octane is expected to reach SR 1.17.
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