“In order to improve the living standards of citizens and for the public good, we have ordered that the price of one litre of petrol for the consumer be changed to 0.60 riyals (21 Australian cents) instead of 0.90 riyals (32 cents) until 10/12/1427,” a government decree said, referring to the last month of the Muslim lunar calendar which would coincide with next January.
The decree, which becomes effective on Monday, also cut the price of one litre of high octane petrol by 25 percent to 0.75 riyals (26 Australian cents) and that of diesel fuel by almost 35 percent to 0.25 riyals (8 cents) per litre.
The move came as Western consumers of the world’s leading oil producer and exporter were facing sharply increased prices at the pumps amid record high crude prices.
US President George W Bush last week ordered a federal investigation into what has caused fuel prices to rise at least 25 percent in the United States over the past month.
US Energy Secretary Samuel Bodman warned in an interview with NBC television on Sunday that high fuel prices for consumers were here to stay for the next couple of years citing huge demand from the fast growing economies of China and India.
Saudi Arabia has been investing heavily to increase its production capacity launching a processing plant in March that raised its daily production by 300,000 barrels to 11.3 million barrels. Its goal is to raise its capacity to 12.5 million barrels per day by 2009.
The United States, the world’s largest oil consumer, is Saudi Arabia’s number one customer and a long-time strategic ally despite the strain to the relationship that followed the September 11, 2001 attacks on New York and Washington, carried out mostly by Saudi nationals.
But Riyadh, which joined the World Trade Organisation last December, has been increasingly looking east, particularly to China.
The kingdom is studying a proposal to set up a Saudi-fed strategic oil reserve in China and is investing billions of dollars along with Chinese partners to build refineries in the country.