New Delhi, Oct 6 (IANS) Saudi Arabia’s accumulated oil wealth and diversification efforts have reduced some vulnerability to supply shocks but largely shifted the risk from reserves to the reliability of getting crude to buyers, a new report has said.
The report from India Narrative said redundancy in export routes helped Riyadh contain the damage when the western export corridor was shut, but the alternative eastern route depends on external security and the western route requires time‑consuming repairs.
“Oil abundance is not oil security, infrastructure is not autonomy — the western door depends on repairs and a contested Red Sea, the eastern on American cover Riyadh does not command,” the report noted.
The East–West pipeline from Abqaiq to Yanbu can carry about 7 million barrels per day and Riyadh used roughly 4–5 million barrels per day through the spring to keep exports at 60–70 per cent of pre‑war levels, the paper added.
The report mentioned Goldman that Saudi Arabia’s own deficit improvement at only about one point of GDP, proving that favourable prices are a shallow cushion against a structural problem.
“The fiscal position worsened, in other words, even as the price rose. The SAR 160 billion deficit, entirely debt-financed, had used 97 per cent of the year’s budgeted shortfall by June,” the report noted.
Analysts had flagged the regional pattern that fiscal sustainability across the GCC is “mostly unrelated to the degree of economic diversification.”
The publication said that the period of easy oil for Saudi Arabia is ending not because its fields are emptying but because the barrel can no longer be assumed to reach the buyer.
Meanwhile, last month in its Saudi Construction Index, Al Rajhi Capital said the kingdom’s construction activity expanded for the fourth straight month in August, driven by resilient demand conditions and a sustained recovery in new orders.
The seasonally adjusted Alrajhi capital Saudi Construction Index, which was compiled by S&P Global Market Intelligence, climbed to 55.4 in August from 55.2 in July.
—IANS
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