Things are starting to look good financially for Saudi Arabia again - very good. The de facto OPEC leader and world’s largest oil exporter said today it posted a budget surplus of 27.8 billion riyals (U.S. $7.4 billion) in the first quarter of the year. The Kingdom actually posted a budget deficit of 34.3 billion riyals in the first quarter of last year as the Saudi economy emerged from a recession in 2017, the first time the economy had shrunk since the global financial crisis nearly a decade earlier.
According to its 2019 budget, Saudi Arabia plans to increase state spending by 7 percent this year in an effort to spur economic growth that was hurt by low oil prices late last year. Saudi finance minister Mohammed al-Jadaan told a conference in Riyadh on Wednesday that expenditure in the first quarter amounted to 217.6 billion, slightly higher when compared to last year.
Not only has Saudi Arabia pivoted from a budget deficit, but the goal of some of the Kingdom’s energy players of having oil prices near $80 or even more per barrel is also now in sight. Global oil prices so far this year have already hit multi-month highs amid the OPEC+ oil production cut put in place at the start of the year to remove 1.2 million barrels per day (bpd) of oil from global markets, as well as output losses coming from Iran and Venezuela from U.S. sanctions, and also loss of output in Libya which is embroiled in fighting around Tripoli. Moreover, now that President Trump has decided to not renew waivers for Iranian oil imports, prices have plenty of upside potential left.