IMF: Saudi Arabia Needs Oil Prices At $80.90 To Balance Budget

The breakeven price for oil in 2023 is estimated to be $52 per barrel.

According to the IMF's latest economic projections, Saudi Arabia requires oil at $80.90 a barrel in order to balance its budget for this year.

The breakeven price is lower than it was in 2021 or 2022 but still higher than the average price of the last two decades.

IMF predicts that Saudi Arabia will run a deficit budget of 1,1% of its GDP due to production cuts this year.

The International Monetary Fund said that Saudi Arabia must have oil at $80.90 a barrel in order to balance its budget for this year.

Economic projections

For the Middle East and Central Asia

Breakeven prices for the world’s largest crude oil exporter are estimated to be lower in 2023 than the $83,60 and $85,80 per barrel levels for 2021 and 2022 respectively, but higher that the average $80.40 for the 20 years to 2019.

According to the IMF, economic growth in OPEC’s de facto leader will materially slow from 8.7% last to 3.1% next year and this year.

The real GDP growth of oil exporters from the Middle East and North Africa region (MENA) is expected to slow down, going from 5.7% growth in 2022 to just 3.1% growth in 2023. This pace will be maintained in 2024. "As the main drivers of growth shift to nonhydrocarbons activities reflecting the agreed oil production reductions," said the economists at the fund.

Saudi Arabia was the leader of a group that included several major OPEC+ producer who announced a surprise 1,66 million bpd in early April.

Cut in production

Between May and December of this year, as "a preventive measure to support the stability on the oil market."

The IMF has now predicted that Saudi Arabia will run a deficit of 1,1% of its GDP in this year due to lower oil revenues, contrary to previous projections of the Kingdom for another year with a surplus.

The first surplus since a decade

Booked for 2022

Fitch Ratings, which upgraded Saudi Arabia’s long-term currency issuer default ratings (IDR) from 'A' to 'A+,' last month, cited the Kingdom’s strong fiscal situation and said that Saudi Arabia’s budget will be close to being balanced this year. This is compared to an excess of 2.5% in 2017.

"formidable" foreign reserves


Saudi Arabia's dependence on oil is still high, despite its decline in the last decade.

Fitch said that the high dependence on oil is a weakness in Saudi Arabia's rating, along with weak World Bank governance indicators, and its vulnerability to geopolitical events.