Heavy pressure on transformation! Goldman Sachs: By 2028, Saudi oil capital expenditure will decrease by $40 billion
Goldman Sachs stated that the current oil revenue of the Saudi government has decreased by about one-third compared to 2022. It is expected that by 2030, 73% of capital expenditure will be directed towards non-oil industries
Under financial pressure, the Saudi Arabian economy is undergoing a difficult transformation.
According to the latest forecast by Goldman Sachs, by 2030, 73% of Saudi Arabia's capital expenditure will be directed towards non-oil industries, an increase from the previous expectation of 66%.
Based on Saudi Crown Prince Mohammed bin Salman's Saudi Arabian economic transformation plan "Vision 2030," Saudi Arabia plans to invest $1 trillion in six key sectors and continue to develop various emerging industries, including artificial intelligence, to reduce excessive reliance on oil sales and open up new paths for economic growth.
Goldman Sachs states that from now until 2028, Saudi Arabia's capital expenditure in the oil industry may decrease by $40 billion, but natural gas will remain "a key contributor to the country's decarbonization, economic development, and diversification plans."
Currently, the declining profitability of the oil industry continues to bring economic pressure to Saudi Arabia.
Goldman Sachs points out that Saudi government oil revenues have already fallen by about one-third from the 2022 level, and the country's fiscal deficit as a percentage of GDP is expected to increase from 2% last year to 4.3% this year.
Due to concerns about a U.S. recession, oil prices fell to $75 last week, and Saudi Arabia's oil production has now dropped to 9 million barrels per day.
Adding to the woes, there are signs of weakening oil demand prospects.
In the OPEC Crude Oil Monthly Report released on Monday, OPEC has lowered its forecast for global oil demand growth in 2024 from 225,000 barrels per day in June to around 211,000 barrels per day, marking the first downward revision of relatively optimistic expectations since the initial release of the 2024 forecast in July 2023.
However, Goldman Sachs also added in the report that progress in financing emerging industries is accelerating, with an expected $235 billion investment in clean energy, higher than the previous estimate of $148 billion. By the end of this century, Saudi Arabia's production capacity target will more than double