Published By : 24 Dec 2015 | Published By : QYRESEARCH
The drastic decline in the prices of crude oil across the globe in this year has wrecked havoc on many industries and has downtrodden the economic stability of many oil producing nations. Some of the major oil producers of the globe, who depend on sales of oil for a larger part of their revenues, are taking strict measures to confine expenditures so as to not face a complete breakdown of national economies.
Analysts suggest that the low oil prices, triggered by a continuous rise in production and decline in consumption, may stay a bit longer on the horizon of the global oil market. Owing to these circumstances, Saudi Arabia, the world’s leading exporter of oil and one of the richest oil producing nations across the globe, is also taking measures to slash spending.
It is being said that the country is considering cutting back on the vast funds, in the range of billions of dollars, it spends for giving generous benefits to its citizen in the financial budget of next year.
Over the years of high crude oil prices, hundreds of billions of dollars were spent by the oil-rich country in the past decade in an attempt to bolster the economy and distribute subsidies for providing cheap food and energy for the 30 million people in the country. But the prices fell down to more than half of what they were by the middle of 2014, forcing the Saudi government to take out funds from the reserves, reassess the spending plans, and look for ways to diversify the economy that is currently highly dependent on oil revenues.
Saudi Arabia exports nearly seven million barrels of oil per day and the revenues generated make for nearly 90% of the government’s overall revenues and nearly 40% of the gross domestic product of the country.
Saudi Arabia now sees the need for cutting its output for boosting oil prices but has been reluctant so far to do it alone. But now, the country is expected to include some policy changes in its next year budget.