Saudi Arabia is facing a sharp drop in crude oil exports, with the country’s domestic market suffering a steep drop in demand amid a sharp fall in global oil prices.
The kingdom’s foreign exchange reserves fell to a record low of $6.5bn on Wednesday, as imports were down nearly 20% on last year.
The fall in oil exports has prompted Saudi Arabia to cut subsidies to the oil industry and has led to a sharp reduction in the value of the kingdom’s currency, the riyal, which is widely used in the kingdom.
Analysts said that the country had lost about $50bn in market value from the fall in crude exports.
The riyals currency has fallen sharply against the dollar over the past three months, with many of the sharp drops seen in the first three months of this year.
Al Jazeera’s Sarah Ngoziadze, reporting from Riyadh, said that as a result of the fall, the Saudi crown prince and other senior members of the ruling family were now worried that the kingdom will have to slash subsidies in the near future, and may not be able to sustain its current deficit of about $2bn.
Saudi Arabia’s foreign currency reserves fell below $6bn for the first time in 11 months on Wednesday as oil exports were down almost 20% since January.
The kingdom’s exports are down by about 10% from the year-earlier quarter, according to figures released by the Ministry of Energy.
The collapse in exports has also forced the government to introduce new restrictions on the oil sector, including cutting subsidies, limiting production, and limiting the amount of oil that can be exported.
Saudi’s economy has been suffering from an economic downturn for years, with a drop in oil prices and a lack of economic growth since the start of this decade.
The Saudi government has tried to limit the impact of the economic slowdown by limiting the number of jobs and increasing spending to fight the disease of poverty.