Oil price highs set Saudi Arabia up for years of economic rebound, S&P says

Saudi Arabia's economy, the biggest in the Arab world, is set to grow in 2021 and over the next three years, said financial services company S&P Global Ratings. 

The Gulf state's average growth rate is expected to be 2.4 percent from 2021 to 2024, sustained by rising oil prices, the relaxing of oil pumping restrictions, and mass vaccination programmes. 

Saudi Arabia was hard hit by the Covid-19 pandemic and record-low oil prices in 2020, recording a 4.1 percent contraction in its economy - the worst dip since 1987. 

"In 2021, the country's economy has begun to rebound, as the global economy emerges from the pandemic and oil prices have improved," said the S&P Global Ratings report. 

Oil prices reached a three-year high on Tuesday, climbing to over $80 (£56) a barrel. 

Around 50 percent of Saudi Arabia’s gross domestic product relies on oil and gas, and the country is a major player in the 23-member alliance, the Organisation of the Petroleum Exploring Countries (OPEC). 

In July 2021, OPEC and allied nations agreed to raise production limits imposed on five countries, including Saudi Arabia, and boost their production by two million barrels per day by the end of the year. 

With restrictions being eased, Saudi Arabia is forecast to pump on average nine million barrels per day for the rest of this year, 9.7 million in 2022, and more than 10 million by 2023, said the S&P Global Ratings. 

This still leaves two million barrels per day spare out of Saudi Arabia's total 12 million capacity, which "give it power, particularly as the leader of OPEC", said S&P.  

Despite calls for investment in renewable energy ahead of the Glasgow climate change summit COP26, crude oil is expected to remain a leading source of energy for decades, OPEC says.