Saudi Arabia has asked state agencies to submit proposals for cuts of at least 20% to their budgets in a fresh austerity drive to cope with a sharp drop in oil prices, four sources familiar with the matter said.
They said the request was made more than a week ago due to concerns about the impact of the coronavirus epidemic on crude markets and ahead of the collapse of an oil output deal between OPEC and its allies on Friday.
One of the sources told Reuters that when the budget requests were sent, Saudi officials had been anticipating difficult talks with Russia over the need for deeper output curbs to stabilise markets. Moscow did reject the proposal, triggering a war for market share between the two countries which has sent crude prices plummeting.
“The oil market was already down due to the coronavirus impact on demand from China, plus there were communications at the (Saudi) sovereign level and the Russians weren’t positive,” the source said.
Read the full article by Marwa Rashad, Saeed Azhar, and Stephen Kalin on Reuters, March 11, 2020