Saudi Arabia cuts dependence on oil amid crude price slump

“Our production policy has been clear, we will meet out customers’ demand and will not leave our customers short of energy”, he said.

“We see real GDP growth decelerating sharply in 2016, albeit remaining positive”, said Monica Malik, chief economist at Abu Dhabi Commercial Bank. “We have the capacity to respond to demand”, he said.

Mr Naimi described his government’s stance as a “reliable policy” as appetite for the commodity is set to pick up in 2016. Oil normally contributes the vast majority of public income.

At around 0700 GMT, US benchmark West Texas Intermediate for delivery in February was up 12 cents at $36.93 and Brent crude for February was trading six cents higher at $36.68.

Oil prices fell Monday (Dec 28) following downcast economic data from China and Japan and a Saudi budget plan that suggested the petroleum-exporting giant is planning for oil prices to stay low.

“Considering the price of oil has declined about 37 percent from the beginning of the year, cutting back expenditure by 2 percent is not a bad sign”.

The Kingdom of Saudi Arabia’s Ministry of Finance has outlined the country’s 2016 budget plans, revealing a plan to reduce spending next year due to low oil prices. Tumbling prices forced the Saudis to unveil a bold programme of spending and subsidy cuts in the 2016 budget. This is a huge deal because oil revenues make up 77% of the country’s total revenue.

Russian Energy Minister Alexander Novak said in an interview this week aired on a Russian television channel Saudi Arabia was to blame for the collapse in crude oil prices, Oil Gas Daily reported.

Disputes between Iran and rival Saudi Arabia, meanwhile, have sparked disunity among the 13 members of OPEC, which issued only vague references to production levels after its last regular meeting in December.

There are no other benefits to prices going as low as they are for oil-rich nations other than killing off their direct competition in the long run.

Both Brent and WTI crude are down over two thirds since prices started dropping in June 2014 amid the U.S. Shell oil boom and OPEC’s decision to continue pumping near-record volumes of oil to push out higher-cost rivals.