The historic deal made on Sunday to cut oil output among major producers puts further pressure on revenues which already hurt by the collapse in prices of crude. Four banking sources said this pushes Saudi Arabia to sell new international bonds soon.
From a previous 30 percent in March, the kingdom increased its debt ceiling to 50 percent of GDP. A combined $17 billion of bonds successfully sold by neighbours Qatar and Abu Dhabi emirate last week.
According to one analyst who based the projection on an average oil price of $40 a barrel, production cuts pledged by Saudi Arabia under Sunday’s pact could wipe nearly $40 billion from state revenues this year.
The impact of measures to stop the coronavirus spread and the oil price plunge has strained the government coffers. To stabilise oil markets, the OPEC and its allies led by Russia agreed to cut output in May and June by 9.7 million barrels per day, or around 10 percent of global supply but the upside for crude prices could be limited even after those record cuts. Oil prices expected by Goldman Sachs to continue to fall in coming weeks.
