Low oil prices and a ban on pilgrimages pummel Saudi Arabia’s bottom line
Riyadh is looking to make budget cuts to counter the impact of the ongoing coronavirus pandemic and falling oil prices.per barrel oil price of $60As of the time of publication, Brent Crude was trading at just under $25 a barrel, a consequence of falling global demand as countries implement lockdowns and their economies contract.
The move has helped contribute to the glut in oil supply, and all but guarantees low oil prices for the coming year, thereby hitting the Saudi bottom line.introduced to help stem the tide of the coronavirus outbreak. While states, like the US and the UK, have been able to temporarily avoid austerity measures and opt for stimulus spending instead, Saudi Arabia does not have the option of propping up its economy in a similar manner.
High dollar reserves are required by the Saudis to maintain confidence in the peg between its own currency, the riyal, and the US dollar. The current rate is stable at 3.75 riyals per dollar.
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