Alwaght -�With a fifty percent reduction in oil prices over the past year, a majority of the OPEC-member oil producers have faced some difficulties in setting the budget for their fiscal year.�The Saudi government, thanks to its daily mass production of crude oil, as well as billions of dollars in its foreign exchange reserves can withstand the consequences of oil price decline for a period of at least five years; however, the minister of finance in a recent statement introduced its plan to reduce the cost of unnecessary items and redress the budget deficit.

Ibrahim al-Assaf, the current finance minister of Saudi Arabia, has said that unnecessary spending would be constrained, including some of the projects which have already been approved; however, they are likely to be implemented with a delay.�He also talked about plans to compensate for the deficit caused by the global decline in oil prices.�Al-Assaf also reiterated that spending in key sectors such as health and education will not be affected.

In the meantime, Saudi Arabia not only has to reduce its costs, but also has to deal with the bond markets.�Oil price decline, for the first time over the past eight years has made Saudi Arabia to deal with the challenge of 35 billion Riyals of bonds ($ 10 billion) with a maturity of 12 months.

The Saudi government estimated that this year, the budget deficit would be approximately 40 billion dollars.�Nevertheless, the International Monetary Fund and the private sector analysts expect that this year the country's budget deficit would amount to $ 120 billion or even more.

With the onset of the global financial crisis and the slump in the share value of the world's major stock markets, the oil prices dramatically dropped in�2008, and�in 2009 the oil prices fell to 40 dollars. However, from 2011 to 2014, the oil prices gradually rose to more than $ 100.�In the winter of 2014, once again the prices of crude oil dropped in world markets, and went down from $ 100 a barrel to less than 50 dollars.

At the present time, OPEC oil prices have reached to nearly $ 40.�Increased oil production in the United States and reduction of oil prices by Saudi Arabia to keep its market share, is believed to be the main reasons for such a decline in oil prices.�However, some other reasons such as Saudis efforts to compete against the Oil Shale Company, to delay the development process of renewable energies as well as to place political pressure on Russia and Iran, were regarded as what Saudi Arabia seeks to achieve through reducing the oil prices. But in the meantime, to preserve the market share and compete with Oil Shale Company are believed to be the main reasons why Saudi Arabia goes along with the global decline in oil prices.

In this context, the US oil production after years of growth, has begun to decline.�Oil production peaked in March 2014, and reached 69.9�Million barrel a day,�in May 2015 the oil production was decreased to 51.90 million�barrels a day. If�this�decrease in oil�price�continues in the incoming�months,�many�companies will be driven into�bankruptcy,�and�Saudi Arabia�will have the chance to achieve its goal in getting the market share, and setting the oil prices a ahead of its rivals.

Therefore, the Saudis' decision to reduce the costs and compensate for the reduction in its income should not be assessed as the surrender of Saudi Arabia in process of the decline in oil prices. On the contrary, it should be noted that the Saudis rely on their reserves of billions of dollars, seeking to attain their goals.

By Alwaght