Saudi Arabia is studying whether to raise domestic energy prices, Oil Minister Ali Al Naimi said on Tuesday, confirming that the kingdom could cut a lavish system of subsidies blamed for waste and surging fuel consumption.
Asked on the sidelines of a mining conference if he expected domestic energy prices to increase in the near term, Al Naimi told reporters: "What you are asking is: is it under study? And the answer is yes."
Al Naimi did not give any details of the possible changes. In the past, officials have spoken privately of the reforms, but Al Naimi's remarks were the first public confirmation of them by such a senior official.
Domestic prices of gasoline, other fuels and the gas feedstock used by Saudi petrochemical producers are heavily subsidised by the government and among the lowest in the world.
Letting them rise would be one of the biggest economic changes in Saudi Arabia for many years and, because of the large number of low-income Saudis who rely on cheap fuel, politically sensitive.
But pressure to consider such measures has increased this year as low oil prices have slashed the revenues of the world's top crude exporting country, saddling it with a state budget deficit that is expected to be well over $100 billion this year.
Reducing energy subsidies could save the government billions of dollars annually, although analysts believe it would proceed slowly and cautiously. Any such decision would require approval at the highest levels of government, including the king.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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