Saudi Arabia, the world’s largest oil exporter, is considering lifting fuel subsidies. This move, reported by Argaam, could potentially save the nation approximately SAR 30 billion annually while curbing local fuel consumption. As petrol and diesel prices are poised to rise, this decision marks a crucial moment in the kingdom’s economic transformation.
Deputy Chairman of the Shura Council’s economic committee, Fahd Al Anzi, highlighted the strategic shift in subsidy focus, advocating for targeted subsidies on essential food and consumer commodities through subsidized supply cards. The proposed policy change could mark a departure from this status quo, aligning with broader economic reforms.
According to the International Monetary Fund (IMF), Saudi Arabia’s energy pricing strategy has long been due for revision. With oil prices on a downward trajectory, the IMF has recommended revisiting energy subsidies. The looming subsidy cuts align with IMF’s advice, although Saudi officials have indicated that deregulation will not occur until public transport projects are complete.
In a parallel move, the United Arab Emirates (UAE) became the first Gulf Cooperation Council (GCC) country to remove gasoline and diesel subsidies in August, resulting in significant price increases. The UAE’s decision set a precedent, reflecting a broader regional trend toward subsidy reform and economic diversification.
Dr. Abdullah Al-Shehri, an energy policy expert at King Saud University, commented, “Saudi Arabia’s potential removal of fuel subsidies is a step toward aligning domestic energy prices with global levels. This move can enhance fiscal stability and encourage more efficient energy use.”
While the economic rationale for subsidy removal is clear, the potential impact on Saudi citizens remains a critical concern. Higher fuel prices could lead to increased living costs, necessitating careful implementation of compensatory measures to protect lower-income households. The introduction of targeted subsidies and subsidized supply cards, as proposed by Fahd Al Anzi, represents one such measure to mitigate adverse effects on vulnerable populations.
ulfn exclusive source within the Saudi Ministry of Finance revealed ongoing discussions around phased implementation strategies. “We are exploring ways to balance economic objectives with social welfare, ensuring that reforms are sustainable and equitable,” the source stated.
