OPEC's top producer and the world's top oil exporter, Saudi Arabia, may soon tap the international debt market to raise money as the oil price crash and the historic oil?
OPEC's top producer and the world's top oil exporter, Saudi Arabia, may soon tap the international debt market to raise money as the oil price crash and the historic oil production cut deal are hitting the Kingdom's primary source of external revenues ? oil income, four banking sources told?Reuters?on Monday.? ?
Saudi Arabia's oil revenues were already?hit by the plunge in oil prices?in March after the Kingdom went on a price war with Russia to claim more market share. The Kingdom reduced government expenditures last month to save money as oil income crashed.
The historic?oil production cut deal?from Sunday, with OPEC+ agreeing to cut their overall crude oil production by 9.7 million bpd in May and June, will be putting additional pressure on Saudi finances because the Kingdom will have to cut a lot from its current production.
According to an analyst who spoke to Reuters, the Saudi cuts in production would reduce the government revenues by almost US$40 billion in 2020 if oil prices average $40 per barrel. A day after the Sunday deal was announced,?Brent Crude?prices were barely in the low $30s, erasing early Monday gains to fall by 0.70% to $31.23 at 8:20 a.m. EDT, as the market appears to see the deal as not enough to respond to the demand loss.
Middle East oil producers have already?started to tap the debt markets?amid growing fiscal pressures on their economies and wealth funds.?
Qatar sold at the start of last week US $10 billion in three-tranche bonds, which received four times as many offers. Qatar's bond issue?the first in the Gulf region since oil prices crashed and the pandemic battered economies and oil demand?was viewed as a test for investor interest in bonds from Middle East's oil producers amid collapsing oil prices.?
Abu Dhabi also sold US$7 billion?in bonds after Qatar's debt issue, sources told Reuters last Wednesday.??
By Tsvetana Paraskova for Oilprice.com
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