Saudi's Foreign Reserves Fall Despite Higher Oil Prices

According to Saudi Central Bank data, net foreign assets (foreign reserves) have fallen by another $8.5 billion over March and is now sitting at $492.9 billion, or the lowest level since 2011.

Since the oil downturn started in late 2014, the decline in foreign reserves total $244 billion. Over that 19-month period, the average monthly decline has been $12.84 billion.

The severity of the decline in foreign reserve is one of the most important reasons as to why Saudi needs a successful Saudi Aramco IPO in late 2018.

Since the start of 2017, Saudi's foreign reserve has decreased by $35.53 billion or a decline of $8.88 billion a month. If the same pace continues for the rest of this year, foreign reserve would fall to $421.852 billion. That would put the reserve close to 2010 levels:

The Saudi government has tried and failed some of the austerity measures it implemented since 2014. The fiscal breakeven according to the IMF remains around $78/bbl, and with most of the income generated from oil sales as opposed to income taxes, Saudi's economy is very sensitive to the fluctuation in oil prices.