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Saudi Arabia plans to sequester budget by 20% to win a price war in the oil market

Ukraine / Digest

OPEC and Russia this weekend began a price war as Saudi Arabia have aggressively reduced the relative price at which it sells its oil at the maximum for at least 20 years.

Saudi Arabia plans to sequester budget by 20% to win a price war in the oil market

Saudi Arabia has asked state agencies to propose budget cuts of at least 20% under the new austerity, to compensate for falling revenues after the fall in oil prices, announced in the Reuters.

According to the Agency, the request was made over a week ago because of fears about the impact of the epidemic of the coronavirus in crude oil markets and on the eve of the collapse of the agreement on oil production between OPEC and its allies on Friday.

the report stated that the Ministry of Finance of Saudi Arabia has instructed government agencies to propose budget cuts for the year 2020 by 20-30%.

Friday, March 6, the meeting of OPEC+ are unable to agree on a new deal to reduce oil production. Russia refused to join a new agreement on production cuts, in turn, Saudi Arabia has announced its intention to increase its own production and offered customers record discounts in April.

the State oil company of Saudi Arabia Saudi Aramco plans in April to increase oil production capacity from 12 to 13 million barrels per day, said in a statement on the Saudi stock exchange.

Monday, oil prices fell by more than 30% amid the collapse of the deal, OPEC+. Brent crude reached the lowest level since January 2016, WTI — from February 2016. On Tuesday the price began to recover and in the course of the trading session the quotations have grown more than 10%.

World oil prices continue to recover after falling on Monday, the price increase exceeds 3%, Brent is more expensive by more than 4%, according to the auction.

One of the world's largest investment banks Goldman Sachs prognozirovat fall in oil prices in the second and third quarter of 2020 to 30 dollars per barrel on the background of the collapse of the OPEC deal+ after Russia's refusal to cut production. On the whole the year 2020, the average price of a barrel of Brent crude is projected at $ 40.

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