Saudi Arabia's Oil Price Hike Boosts Asian Market
Saudi Arabia's decision to extend oil production cuts may lead to an economic contraction in the country, which was the fastest-growing economy in the Group of 20 last year. The boom was driven by record crude output and high oil prices, but a global economic slowdown has reduced crude demand. The economy is projected to fall by 0.1% this year if production is raised in September and by 1% if the cuts continue. The non-oil economy, however, remains strong, with private companies outside the oil industry experiencing record-high orders. The government aims to transform the non-oil economy under its Vision 2030 plan. The decline in petrodollars has pushed the budget into a deficit and may require increased borrowing. Saudi Arabia's breakeven oil price is nearly $81 a barrel, but it rises to almost $100 a barrel when considering spending on giga-projects. Oil remains crucial to the country, accounting for a significant portion of exports.