Oil prices in tankers can double Saudi’s deficit

Reduction of oil prices caused by demand, World Trade War fights and raw offer growth can more than double Saudi’s budget deficit, the Goldman Sachs economist warned.

Perspective Bank in the focus of pressure on the kingdom to make changes to its Mammoth expenses plans and financial action.

“The deficit on the financial side, which we will probably see in the GCC countries (Cooperation Council in the Persian Gulf), especially large countries such as Saudi Arabia, will be quite significant,” said Faruk Susa, the Middle East and North Africa economist Goldman Sachs.

Costs in the Kingdom of Vision 2030, a wide campaign to transform the Saudi economy and diversification of its revenues from hydrocarbons. The central part of the project is Neom, but rarely inhabited by a megaregion in the desert is approximately the size of Massachusetts.

Neom plans include hyper-foot-based developments, which are generally estimated by a whole $ 1.5 trillion. The Kingdom also holds the 2034 World Cup and the 2030 World Exhibition, both shamefully expensive.

Saudi Arabia needs oil from more than $ 90 a barrel to balance its budget, according to the International Monetary Fund. This week, Goldman Sachs reduced the oil value in 2025 to $ 62 a barrel for Brent Crude, declining compared to the previous $ 69 forecast, which the bank’s economists can more than double the Saudi Arabian budget in 2024.

“In Saudi Arabia, we believe that we will probably see that the shortage will grow from $ 30 to $ 35 billion to $ 70 billion, when about $ 62 remained this year,” Susa said.

“This means that more borrowing probably means more cost reduction, it probably means more asset sales, all of the above, and it will affect both internal financial conditions and potentially international ones.”

Funding for this level of deficit in international markets “will be difficult”, given the trick of international markets, he added, and probably means that the Riyady will need to look at other options to overcome his financing gap.

The kingdom still has a significant supply to borrow; Their ratio of GDP debt as of December 2024. Just less than 30%. By comparison, the ratio of debt and VDP and France make up 124% and 110.6% respectively. But $ 75 billion will be difficult for absorption, Susa noted.

“This is a debt rate to GDP, although comforting, does not mean that the Saudi can issue as much debt as they like … They should look at other remedies,” he said, adding that these remedies include reducing capital costs, raising taxes, or selling more their home assets. Several Neom projects may be on a divided block, predicted by regional economists.

Saudi Arabia has an A/A-1 credit rating with a positive outlook with Global Ratings S&P and A+ rating with a stable Fitch forecast. This is combined with high foreign currency reserves – $ 410.2 billion as of January, According to CEIC – Put the kingdom in a comfortable place to manage the deficit.

The Kingdom also launched a number of reforms to increase and risk foreign investment and diversification of revenue flows, which, according to S&P Global, in September “will continue to improve the economic sustainability and wealth of Saudi Arabia.”

“So, the Saudis has many options, the combination of all this is very difficult before the judge, but, of course, we do not look at some crisis,” Susa said. “It’s just a question what options they are going to deal with the problems they face.”

Global benchmark Bronwed raw He traded $ 63.58 a barrel on Thursday at 9:30 am in London, approximately 14% a year.