The intention to privatize national oil company Saudi Aramco is one of the methods to adapt to the low oil prices, believes Jason Tuvey – an analyst with the British consulting company Capital Economics.
Tuvey thinks that the tax rate hike, privatization, and plans to decrease state expenses by 14% flag that the government intention to adapt to even lower oil prices by means of fiscal policy tightening.
Saudi Arabia is not interested in oil production cut prices stabilization, the analyst reckons. However, the total privatization of the Aramco capital assets is not likely.
Mohammad bin Salman Al Saud, Deputy Crown Prince of Saudi Arabia said in the interview to The Economist that the IPO of Saudi Aramco is possible. The Crown Prince said that the decision will be made in the coming months.
It should be mentioned that Saudi Aramco produces more than 10% of the world’s oil. The decrease in oil prices to the 12-year minimum during the last 1.5 years led to profit reduction for oil-producing nations including Saudi Arabia which tries to control state spending.
Despite the sharp oil prices’ drop, Saudi Arabia’s economy is healthy. Salman told The Economist that oil and gas revenues were increased in general by 29%.
