Saudi oil minister welcomes Trump energy policies
The Trump administration’s energy policies, including planned growth in US oil production, are good for the oil industry, according to Saudi Arabia’s oil chief.
“He has steered away from excessively anti-fossil fuel, unrealistic fossil fuel policies,” Khalid Al-Falih said in a BBC interview.
As a candidate, Donald Trump had warned that he would be taking actions to make America less reliant on “our foes and oil cartels” and was even more explicit in the days after his inauguration where he said the White House would be: “committed to achieving energy independence from the OPEC cartel and any nations hostile to our interests.”
Al-Falih said he was unconcerned, telling the BBC’s Lyse Doucet: “President Trump has policies which are good for the oil industries”, and his country may be making further investments in US oil infrastructure in the near future.
“We have no problem with the growth of American indigenous oil supplies. I’ve said it repeatedly, as long as they grow in line with global energy demand we welcome them.”
“We have billions of dollars invested in refining and distribution in the US and we may be increasing that investment on the back of pro-industry, pro-oil and gas policies of the Trump administration in the US.”
Yesterday the Gulf state announced that it would be introducing a five per cent value added tax, marking the end of “tax-free living” in Saudi, where many commodities have been heavily subsidised.
The move followed a recommendation by the IMF that the members of the Gulf Cooperation Council (GCC) should find additional means of raising revenue as profits from oil continue to fall.
Saudi hit a record budget deficit of $97bn last year and has initiated a major programme of economic diversification, with aims to balance its budget deficit by 2020.
As the richest state in the region, and the biggest exporter of crude globally, Saudi Arabia currently benefits from an 85 per cent tax on the state-run oil company, Aramco. In what is expected to be the largest IPO in recent times, Aramco will make its stock market debut later this year.
Deputy crown Prince Mohammed bin Salman expects the IPO, which will offer up five per cent of the oil giant, will value the firm at around $2 trillion. The Saudi government plans on reducing its 85 per cent tax on the firm’s income in order to make it more attractive to investors.
Roughly three million barrels a day entered the US from OPEC countries in 2016, according to Bloomberg, with about one third of the volume coming from Saudi.
The value of Brent Crude has risen by 60 per cent since January 2015 and is now priced at $55 per barrel but is far from its peak in 2014.