gulfnews : Saudi need for oil at $85 may speed cutback

Saudi Arabia may start cutting oil output ‘much sooner' than it did after the financial crisis in 2008 because it now needs crude prices of at least $85 (Dh312.2) a barrel to pay for spending, Sanford C. Bernstein & Co said.

The kingdom's 2011 budget forecasts revenue of $144 billion and expenditures rising 7.4 per cent to $154 billion, suggesting a $65 a barrel break-even price, Oswald Clint, a London-based analyst at Bernstein, said in a report yesterday. Additional spending of $36 billion announced in February increases the breakeven price by $20 a barrel, assuming the Saudis export 75 per cent of current production, he said.

Oil fell 0.8 per cent at 4.35pm in Singapore to $85.03 a barrel in electronic trading on the New York Mercantile Exchange, heading for a third weekly decline on concern that debt crisis in Europe and the US will worsen an economic slowdown. Crude traded last week for as little as $75.71 a barrel, a ten-month low.

* username: rupertbu