Saudi credit rating down amid looming threats on oil facilities
Saudi Arabia’s credit rating has been cut amid increased risk of attacks on its oil facilities, a further blow to a government led by an ambitious young prince who seeks to modernize the economy and diversify it away from oil.
Rating agency Fitch said on Monday that it had downgraded Saudi Arabia’s credit rating to A from A+ following September 14 attacks by Yemen's militia-led government which seriously affected crude production in the kingdom.
“We have revised our assessment of the vulnerability of Saudi Arabia’s economic infrastructure to regional military threats as a result of the most recent attack,” Fitch said.
“Although oil production was restored fully by end-September, we believe that there is a risk of further attacks on Saudi Arabia, which could result in economic damage,” it said.
The agency insisted that a lower rating for Saudi Arabia’s economic position was a product of the kingdom’s foreign policy which many believe has fueled tensions in the Middle East and in the Persian Gulf region.
It said Riyadh had itself to blame for the downgrade as it keeps implementing US policies in the region and goes on with a costly and bloody military adventure in Yemen.
“In our view, Saudi Arabia is vulnerable to escalating geopolitical tensions given its prominent foreign policy stance, including its close alignment with US policy on Iran and its continued involvement in the Yemen war,” said the rating agency.
The Saudi government said it was dismayed by the Fitch announcement as it could seriously impact foreign investment in the kingdom and undermine the Vision 2030, an ambitious scheme launched by Prince Mohammad bin Salman to spur economic development in the country.
The Saudi finance ministry said the downgrade was “swift” and failed to consider Riyadh’s ability to restore oil production to levels before the Yemeni attacks.
S&P Global Ratings, another major international rating agency, has also said it would downgrade Saudi Arabia’s rating should its oil facilities come under fresh attacks.
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