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Sunday, September 24, 2023

Saudi Arabia’s growth sinks, Russia’s soars, exposing OPEC’s unequal burden

Saudi Arabia’s growth downgraded by IMF due to oil revenue drop from production cuts. IMF revises growth forecast from 3.2% to 1.9%. Saudi Arabia led last year’s fastest-growing economy in G20.

Revenue windfall from higher crude prices after Russia’s invasion of Ukraine, prompted Saudi Arabia to push OPEC+ members to cut global supplies. However, Saudi Arabia bears the heavier burden, while Russia benefits without making sacrifices.

Tensions rise as Russia resists cutting exports, straining relations with Saudi Arabia. Both countries try to downplay rumors of a rift.

Saudi Arabia faces the dilemma of whether the growth drop will impact Crown Prince Mohammed Bin Salman’s plans to diversify the economy. IMF suggests Brent crude prices above $80 per barrel are needed for budget balance and funding mega-projects like Neom and Red Sea island developments to reduce dependence on fossil fuels. Brent crude currently trades at $82.79 per barrel.

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