Saudi Studying Rise in Domestic Energy Price

Saudi Arabia is studying a rise in its heavily-subsidized domestic energy prices, the oil minister said on Tuesday, as the kingdom confronts a record deficit caused by falling oil revenues.

"All prices eventually rise," Ali al-Naimi said on the sidelines of a mining conference.

"Is it under study?... the answer is 'Yes'," he told reporters, without commenting further.

Fuel consumption in Saudi Arabia has risen nine times since 1971, leaving it the sixth-largest oil consumer in the world, according to one study.

Saudi petrol prices are the cheapest in the Gulf and among the lowest on the planet. Motorists in the kingdom can fill their tanks for around $6 (5.4 euros) for a sedan or $18 for an SUV.

Electricity and water are also heavily subsidized.

A senior World Bank official last year said the oil-rich Gulf states spend more than $160 billion on energy subsidies annually.

Saudi Arabia accounted for about half that figure.

A 2013 report from the University of California, Berkeley, said the kingdom had the world's largest fuel subsidies, at about $25 billion in 2012.

Oil makes up roughly 90 percent of Saudi government revenue but global prices have dropped by more than half from early last year to less than $50 a barrel, reducing revenue.

The International Monetary Fund projected a budget shortfall of 19.5 percent of Gross Domestic Product, or around $130 billion, this year but said the Saudi deficit would fall in 2016.

It said that the kingdom had informed the IMF that it was considering energy price reforms for commercial and industrial users.

Adjusting Saudi gasoline and diesel prices -- currently among the lowest on Earth -- to that of Gulf levels would save $17 billion this year.

The United Arab Emirates, another oil producer facing a budget deficit, in July ended subsidies on fuel, in a move expected to save it billions of dollars annually.