Nine months after Saudi Arabia's second-largest oil price war in the last five years, the country is now facing the impact of its actions on its own economy.
The latest data released at the end of September shows that Saudi Arabia's Gross Domestic Product (GDP) contracted 7% year-on-year in the second quarter of 2020, with growth in the private sector showing a contraction of 10.1% while the public sector was negative at 3.5%.
Saudi Arabia's oil revenue in the first half of this year was 35% lower than the previous year, while non-oil revenue fell 37%. In addition, in the second quarter of 2020 alone, the country's petroleum refining activity recorded a 14% decrease.
This resulted in a current account deficit of SAR67.4 billion ($ 18 billion), or 12% of GDP, compared to the surplus of SAR42.9 billion, or 5.8% of GDP, the previous year, according to the Saudi General Statistics Board.
However, the main cause that contributed to this decline was not only due to world oil demand affected by the spread of Covid-19 but also the price war sparked by Saudi Arabia by increasing its crude oil production.
For a market that is already full of oil supply due to declining demand, the impact of supply on the supply side has led to a major catastrophe and caused prices to change negatively for the first time in history on WTI futures contracts for May.
The Covid-19 crisis, which was initially thought not to be serious, eventually continued to have a major impact on the world crude oil market.
