Saudi Arabia caps retail gasoline prices at $0.58/barrel on soaring costs

Quantum Commodity Intelligence - Saudi Arabia has placed a cap on domestic gasoline prices to boost economic activity and reduce the cost of living, with Saudi's paying record prices at the pump this summer.

The Kingdom has issued a royal decree capping prices for a litre of petrol at 2.18 Saudi riyals ($0.58/liter) and 2.33 riyals for the 91 RON and 95 RON grades, respectively.

Prior to 2018, retail gasoline was heavily subsidised with pump prices of under $0.20/b costing the Saudi treasury $10s of billions per year.

"The state shall shoulder any increase over June pricing, during the monthly periodical revision of the pricing," the Saudi Press Agency reported, quoting a statement from the executive committee for the governance of amending energy and water product prices.

The removal of subsidies has largely been hailed a success, but with international crude prices recently hitting multi-year highs, soaring domestic prices were proving unpopular.

Middle East benchmark Dubai crude has been trading above $70/barrel since early June, according to Quantum data.

Meanwhile, Middle East gasoline in the spot market has been trading at over $80/b during July, with gasoline premiums over crude at the highest levels since the pandemic started.

A number of Middle East and Asia economies have reduced or removed road-fuel subsidies in recent years, with retail prices increasingly a political issue.