Saudi Petrol Prices

Saudi petrol prices

The Kingdom of Saudi Arabia has the second largest oil reserve in the world. In 2020, Saudi Arabia was the largest oil producer in the world. KSA accounted for producing 456 thousand barrels of motor gasoline every day. It is expected that by the year 2026, the country will produce 543 thousand barrels of motor gasoline per day. The Saudi economy is heavily reliant on the supply of crude oil, and the expansion of the existing fuel station infrastructure, and the ever-increasing investment in this sector by national corporations, and foreign players are primary contributors to drive the fuel station market. The country has witnessed a huge interest from foreign companies to invest in the fuel stations across the country. This is likely to accelerate the fuel station market.

The Saudi government has imposed a cap on local gasoline prices since last July, this was done in order to help alleviate the living costs, and boost the overall economy. The fuel prices will be capped at 2.18 riyals per litre for 91 octane grade, and at 2.33 riyals per litre for the 95 octane variety. The annual inflation in the KSA has accelerated for the second consecutive month. Alongside the increase in prices of fuel, there has also been an increase in food, beverages, and transport.
The government is trying hard to bring the prices of domestic fuels as close to prices of international fuel. The reforms also try to ease the subsidies applied on state finances, and also work on improving the energy efficiency, and cut consumption. Last year the economy of Saudi Arabia slumped by 4.1%. This year the country has projected to grow by 2.1% as it recovers from the corona-pandemic. The oil industry witnessed a decline in demand post the pandemic.
In hopes of kindling the domestic demand of fuel, the Saudi government has imposed a cap on the rising gasoline prices. The Saudi gasoline demand has failed to recover post-pandemic, and the gasoline demand has still stood at 468,000 b/d in 2020. A cap on gasoline prices could increase driving activity. Back in 2014, the price of gasoline was stacked at 0.16 USD per litre, that price increased to 0.24 USD per litre in 2016. This means there is an increase of 50%.

In 2021, the Saudi Arabian government set an upper limit for prices of gasoline, and they took responsibility for bearing any extra-costs. The upper limit was set at 2.18 riyals per litre of 91 octane, this decision was taken to decrease the burden of living costs on its citizens. Although the prices of fuel in Saudi Arabia happen to be one of the lowest in the international markets, there is a popular discontentment with the overall rise in prices of petroleum, and electricity. The projection is that the prices of gasoline will keep changing as the global energy prices change, and the government will supposedly cover up for any increase that would have exceeded the prices back in 2021. The change will inherently deduce the impact of subsidy reforms which were brought in by the Crown Prince Mohammad bin Salman.

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