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Fri 11 Nov 2011 10:14 AM

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Saudi Arabia seen able to cope with $80 oil in 2012

Petromatrix says Gulf kingdom is likely to finish 2011 with significant budget surplus

Saudi Arabia seen able to cope with $80 oil in 2012
oil refinery

Saudi Arabia would be able to cope with Brent crude oil at an average price of $80 a barrel next year, according to consultant Petromatrix.

Brent futures traded at about $113 a barrel on London’s ICE Futures Europe exchange on Thursday.

In April, Bank of America Corp estimated that the world’s biggest crude exporter needed a price of $95 this year to cover increases in government spending.

Saudi Arabia is likely to finish 2011 with a “significant” budget surplus, Petromatrix said in a report.

Prices have exceeded the state’s minimum requirements and exports have risen, enabling it to handle lower price levels through to 2013, it said.

The kingdom boosted shipments earlier this year to compensate for a halt in Libyan supplies.

“The kingdom could in theory afford to see Brent at $70 and still be within the budget constraints over a two-year period,” said Olivier Jakob, Petromatrix’s managing director.

“We can leave a bit of room in the price target to compensate for lower exports, but one way or another Saudi Arabia could afford to have Brent trade on average at $80 next year.”

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