The attack on Saudi Arabia's oil installations has exposed the kingdom to economic headwinds
The September 14 attacks on Saudi Arabia’s oil facilities were an eye opener for international investors. The cruise missiles and drones had left the Abqaiq oil processing plant and Khurais field under a plume of black smoke, cutting off half of the kingdom’s oil supply and sending oil prices soaring. downgraded
Saudi Arabia derives more than two-thirds of its revenue from the production and export of oil. Despite recent attempts to diversify its economy, the government still depends on oil to meet its spending needs. did expose vulnerability of Saudi oil infrastructure,” David Butter, a Middle East analyst at Chatham House, told“It would take some time for the production to be completely restored and in the meantime you can’t rule out the possibility of more attacks.
The New York-based Fitch says it’s decision was also based on deterioration in Saudi Arabia’s fiscal and external balance sheets. “They have introduced VAT [value added tax] and other charges to increase non-oil revenue in the budget but in some ways they have made things difficult for the private sector,” says Butter.
In late 2017, Saudi Arabia announced the detention of hundreds of business tycoons, including members of the royal family, in an anti-corruption purge. Saudi authoritiesit was a long-awaited clampdown on a system of privilege that has made a select few super-rich in the kingdom.
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