By OGJ editors
HOUSTON, Aug. 5 -- Saudi Arabia has a stable outlook based on the kingdom's position as the world's largest oil exporter and holder of the world's largest proven oil reserves, the New York-based Moody's Investors Service said.
Moody's had upgraded Saudi Arabia's ratings in June as geopolitical risk stemming from the war on Iraq diminished. The rating agency's recent report, "Saudi Arabia Global Credit Research," is a yearly update and not a formal action to alter the credit rating.
"Despite the recent withdrawals of US forces from Saudi soil that, on the surface, might signal a downgrading in its explicit security arrangement with the US, Saudi Arabia continues to enjoy external protection that would be available in an extreme-case scenario," said Adel Satel, a Moody's vice-president and senior credit officer.
"The kingdom's dominant oil market position confers strategic importance and security guarantees from the US and other industrialized nations," he said.
Saudi Arabia's stable outlook reflects a balance between the country's fiscal vulnerability to swings in oil prices, and its ability to withstand those shocks, the report said.
Moody's explained that Saudi Arabia's limited real gross domestic production growth of 0.74% in 2002 primarily stemmed from a decline in the oil sector following production cutbacks.