Saudi Arabia Makes Rare, Bullish Call on Oil in Its 2019 Budget

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oil price; Aramco; saudi arabia
Saudi Aramco's Ras Tanura oil refinery Photographer: Simon Dawson/Bloomberg

Saudi Arabia’s government expects to earn more from oil next year, an optimism that defies most price forecasts for crude and contrasts with the kingdom’s history of making conservative financial assumptions.

The world’s biggest crude exporter is estimating that oil price will average about $80 a barrel in 2019 assuming its production continues at 10.2 million barrels a day and Saudi Aramco won’t increase its allocations to the government, according to Ziad Daoud, Bloomberg’s chief economist in the Middle East. He estimates oil will need to trade above $95 a barrel for the year for the kingdom to balance its budget.

Analysts forecast oil price in 2019 will hover around $73 a barrel, according to data compiled by Bloomberg. Saudi Arabia sees its oil revenue rising to a five-year high next year, but will still post its sixth-straight budget deficit.