Saudi Arabia to generate record-high oil revenues in 2012: investment bank

Dubai (Platts)--24Oct2012/925 am EDT/1325 GMT

Higher crude prices and increased production will enable Saudi Arabia to collect a record Saudi Riyals 1.08 trillion ($288 billion) in oil revenue in 2012, 4% higher than last year, Riyadh-based Jadwa Investments said in a report to clients Wednesday.

Saudi Arabia, the world's largest oil exporter, is likely to keep its crude production "elevated" through the end of the year, at 9.9 million b/d, the investment bank said. The kingdom averaged that production level in the first eight months of 2012, 8.5% higher than during the same period last year, with April and June production surpassing 10 million b/d.

The report cited previously reported comments from Saudi Oil Minister Ali Al-Naimi indicating that the kingdom would be ready to increase its production levels to meet additional demand and moderate prices.

The investment bank expects the Saudi crude export price to reach $109/b, after previously forecasting $100/b. It said higher production and higher prices will enable Saudi Arabia's GDP to grow by 6.1% in 2012.

"Despite the prevailing global economic gloom, the Saudi economy continues on a solid growth path," Jadwa Investment said. "We expect Saudi crude production to remain elevated throughout the rest of the year, particularly as the market conditions are not likely to go through a significant change."

The bank predicted that oil prices worldwide are set to remain high and volatile for the remainder of the year, with fears of political instability in the Middle East likely to more than offset slowing global demand for crude.

It projects Brent crude averaging $114.40/b this year, 3% higher than last year, while West Texas Intermediate will average $104/b, 9% higher than last year.

"For the remainder of the year, we expect geopolitical concerns and low spare capacity to outweigh the impact of weak economic data and to keep oil prices elevated," Jadwa Investment said.

Predicting oil prices next year will be more complex, "given the significant implications of the upcoming fiscal and political events," it added.

--Herman Wang, herman_wang@platts.com
--Edited by James Leech, james_leech@platts.com