#SaudiArabia Oil Needs Go Up as Fitch Says Budget Balances at Over $90 - Bloomberg

Saudi Arabia Oil Needs Go Up as Fitch Says Budget Balances at Over $90 - Bloomberg

Saudi Arabia will need oil prices to average more than $90 a barrel this year to balance its budget, according to Fitch Ratings, which affirmed the kingdom at the fifth-highest investment grade but warned over its reliance on energy.

The government’s fiscal breakeven price “has risen in recent years and we forecast it will remain above $90 per barrel in 2024 before falling to $85 per barrel in 2025,” Fitch analysts including Toby Iles said in a report Monday,

Saudi Arabia’s dependence on energy prices remains a weakness to its overall creditworthiness, they said. Still, the company left Saudi Arabia’s sovereign rating at A+, keeping its outlook stable.

Fitch’s breakeven estimate is far higher than the International Monetary Fund’s forecast of slightly less than $80 for this year, according to its October regional outlook. If counting domestic spending by the kingdom’s wealth fund, Saudi Arabia requires oil at $108, according to Bloomberg Economics.

The assessment explains why the world’s largest oil exporter is having to maintain curbs on its crude output, an approach that’s sacrificed sales volumes for what’s so far been a minimal reward in terms of higher prices. Global benchmark Brent crude hasn’t been at $90 since last October and traded at just over $77 in London on Monday.