Saudi Arabia’s Oil Revenue Forecast to Plummet by End of Decade
The International Monetary Fund (IMF) has projected a steeper decline in Saudi Arabia’s oil revenue than previously anticipated, raising concerns for Crown Prince Mohammed bin Salman’s ambitious economic transformation plans under Vision 2030, Bloomberg reports.
While the kingdom’s oil revenue is expected to rise to $209 billion in 2026, reaching 26% of its GDP, it is projected to dip to $195 billion in 2029, a steeper drop than previously estimated. This decline comes at a time when Riyadh has already been forced to scale back some of its Vision 2030 initiatives due to oil prices remaining below the levels needed to balance the budget.
The IMF has noted that Saudi Arabia requires oil prices of $96 per barrel to balance its budget, significantly higher than the current global benchmark Brent price of around $75.
The kingdom’s reliance on dividends from its 81% ownership of Saudi Aramco further complicates the situation. While the company is expected to pay out $124 billion in dividends this year, including a special component introduced in 2023, the special payout is projected to decrease next year based on Aramco’s formula.
The IMF’s forecast assumes that the Saudi government will not sell or transfer any further stakes in Aramco, a move that would further reduce its revenue from the company.
The IMF’s report highlights the challenges facing Saudi Arabia as it seeks to diversify its economy away from oil dependence. The kingdom’s reliance on oil revenue, combined with the current weakness in the oil market, poses significant risks to its economic future and its ability to fully realize the ambitious goals of Vision 2030.
The key question for Riyadh remains how the current oil market weakness will impact its finances and production policies. The report indicates that Saudi Arabia’s oil production is expected to increase to 11 million barrels per day by 2029, but this trajectory hinges on future oil prices and global demand.
