Saudi Arabia reaps the results of the oil price war ... reduced the country's budget by 13 billion dollars

The Saudi government has approved a partial reduction in some items of its budget by 50 billion riyals (13.3 billion dollars), as a result of the current and expected oil prices decline, following the price war that it launched after the failure of an agreement with Russia and other producers.

This comes after Moscow - the second party in the oil price war - announced an expected loss of nearly forty billion dollars.

The Saudi Finance Minister, Muhammad Al-Jadaan, said on Wednesday that the reduction represents less than 5% of the total expenditures approved in the 2020 budget.

The Saudi minister stated that the reduction was a result of economic and global conditions resulting from the consequences of the outbreak of the new Corona virus (Covid 19), the sharp decline in the outlook for global economic growth, and its negative impact on oil markets.

He added that additional measures will be taken to deal with the expected drop in prices, and that given the potential effects of the Corona virus outbreak, new developments will be reassessed, expenditures items reviewed and appropriate decisions taken in a timely manner.

Saudi Arabia announced the 2020 budget, spending 272 billion dollars, against revenues of 222 billion dollars, anticipating a deficit of fifty billion dollars.

Oil prices - the main source of income for Saudi Arabia - have witnessed sharp declines since the outbreak of the Coruna virus and the collapse of the OPEC Plus agreement, recording today the lowest levels since 2002 at 25 dollars for Brent crude.

The production cut agreement disintegrated after Russia rejected OPEC's proposal to cut total production by 3.2 million barrels per day until the end of 2020, which led to the end of the longest agreement to cut oil production between the organization's producers and others independently for more than three years.

After the production cut agreement failed, Saudi Arabia announced huge increases in production and export, which reinforced the fall in crude prices.

Also yesterday, Russian Finance Minister Anton Celyanov said that Russia’s budget revenue from oil and gas sales will be three trillion rubles ($ 39 billion) less than expected for this year, due to lower crude prices.

Despite the increase in the deficit, analysts from "Gazprom Bank" said that the Ministry of Finance has sufficient reserves to continue spending, including those of the sovereign wealth fund.