Jadwa: The Kingdom adopted a “cautious stance” on oil prices ‎in 2024 budget ‎

A report by Jadwa Investment Company suggested that the Saudi government adopted a “cautious stance” on oil prices in the estimates of the state’s general budget for the year 2024, in light of the current data of the oil market. The report adds that it is normal for the government not to disclose oil price and production assumptions (oil revenues are included in another revenue bracket).

The “Jadwa” report continues: However, it appears from the estimates of oil revenues for the year 2022 that the competent authorities include dividends from “Aramco” linked to performance in their assumptions related to oil revenues (instead of treating them as means of financing the deficit).

Although these profits are clearly variable, Aramco’s free cash flow is structurally large enough that profits of 150 billion riyals can be expected next year. In fact, these profits will raise the government’s share of oil export revenues from 70% in 2022 to approximately 90% in 2024.

According to rough estimates – according to Jadwa Company’s report – the government used an oil price of $76 per barrel to calculate its revenues in 2024 (these estimates are based on the assumption that the Kingdom’s reductions in its crude oil production will be extended until the second half of 2024).

The Kingdom estimated revenues for 2024 at 1,172 billion, expenses at 1,251 billion, and the deficit at 79 billion. On the other hand, actual revenues for the year 2023 amounted to 1,193 billion riyals, expenses were 1,114 billion riyals, and the deficit was 82 billion riyals.

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