With China’s economic crash driving U.S. oil prices down to $42 a barrel, Saudi Arabia is the oil-exporting nation suffering the worst economic decline.
The 15,000 members of the six branches of the Saudi royal family have been buying national support with massive social welfare spending. But with the oil price plunging by 60 percent, causing a massive budget deficit, the kingdom’s foreign exchange reserves could be wiped out in four years.
Most analysts have focused on Russia as suffering the worst impacts of the oil price crash. The value of Russia’s oil & gas production is approximately $350 billion per year; it accounts for 20 percent of Russia’s GDP, and equals two thirds of all exports. But even at current prices, Russia will still achieve a trade surplus of about three percent of GDP. As an oil exporter, Russia’s is uniquely self-sufficient and a military exporter.
Saudi Arabia’s oil and gas sector makes up 45 percent of GDP, funds about 80 of the government’s budget, and accounts for 90 percent of exports. Saudi Arabia’s 2014 budget spending was $294.3 billion, with a $14.4 billion deficit. The 2015 Saudi budget was cut down to $229.3 billion in spending, with an expected $38.6 billion deficit.
But in June with the average price of oil estimated to be $60 a barrel for the year, the IMF estimated that Saudi Arabia’s $745 billion GDP would fall to $649 billion and the nation would post a budget deficit of 20 percent of GDP, or $130 billion.
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