Saudi Economy Enjoys Benefits of Higher Global Oil Prices
Official reports say Saudi Arabian economy earned an almost 10-percent expansion of its GDP over the first quarter of the year; attributable to the sustained global rise in oil prices.
Al Jazeera reported yesterday that at 9.9%, the economy of the Kingdom of Saudi Arabia grew during the quarter in review, noting that it is the highest since the third quarter of 2011.
“This growth is due to the high increase in oil activities by 20.3 percent,” the report quoted Saudi statistics.
Saudi’s official oil company, Aramco, which as of 2020, was regarded as one of the largest companies in the world by revenue, reported a net profit of $39.5billion for the first quarter, all thanks to global higher oil prices.
The profit showed an 82% annual improvement and a record quarterly profit for Aramco since it went public three years ago. The report further indicated that as a percentage of total GDP, oil and gas accounted for 32.4% and was the highest contributor to growth during the reporting period.
Meanwhile, non-oil activities increased by an annual 3.7% in the first quarter.
“The underlying data still points to a healthy pace of expansion in the non-oil sector,” according to Monica Malik, chief economist of Abu Dhabi Commercial Bank, who spoke to Al Jazeera.
“Saudi is in a very strong position, given the limited global oil capacity and the high oil prices,” she added.
He report said the strong performance of Saudi Arabia’s oil industry is set to continue as the world supply remains tight.
It will be recalled that Saudi Arabia raised its official selling prices for almost all buyers of its crude for July deliveries, with the increase most substantial for Asian buyers.
However, Saudi Arabia also committed, alongside OPEC+, to boost monthly production by almost 650,000 bpd combined net month and in August, up from an originally agreed 432,000 bpd.
So far, this has failed to have any negative effect on oil prices because, besides Saudi Arabia and a couple of other Middle Eastern producers, OPEC members are finding it hard to pump as much as originally agreed.