Oil Revenues Above Saudi Budget Breakeven Price Will Go to PIF Coffers, Al Tuwaijri Says

Steadily climbing oil prices over the past year may help increase cash in Saudi Arabia’s massive Public Investment Fund (PIF), according to comments by Mohammed Al Tuwaijri, the kingdom’s minister of economy and planning.

“Whenever oil is above our break-even point, this will all go to the PIF,” he said, as reported in the Financial Times, without disclosing what the kingdom regards as the level at which the fiscal balance is zero. “So in that sense they will have a lot of funding hopefully.”

Mohammed Al Tuwaijri.

Mohammed Al Tuwaijri.

The price of oil on international indices has climbed significantly since June 2017, when prices hovered around $45 a barrel on the Brent crude index. Prices today reached the $65 a barrel mark.

The comments indicate a shift in financial power by the Saudi government from the Central Bank to the Public Investment Fund, according to the FT. “Shifting the balance of financial power from the central bank — a conservative institution and decades-old bureaucracy — towards PIF should allow the kingdom to magnify returns on investment overseas through big bets on global companies. It will also enable greater investment in schemes designed to diversify its oil-dependent economy.”

The remarks by Al Tuwaijri also imply the kingdom will continue to manage the oil market through production cuts.

Saudi Arabia’s Public Investment Fund has taken major investments in international corporations like Uber and its regional rival Careem, STC, SoftBank, as well as several local Saudi banks, according to the PIF’s portfolio website.