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Saudi Social Spending to Support Russia for Years, Sberbank Says

Saudi Arabian social spending aimed at preventing the kind of political unrest that has gripped the Middle East will help support oil prices and Russia's economy, OAO Sberbank said.

The country's higher spending commitments require crude prices of about $100 a barrel, a level that would support Russian budget revenues "for a long time to come," Ksenia Yudaeva, chief economist at Russia's largest bank, told reporters today in Moscow.

"The overall social tension in Saudi Arabia will definitely help keep Russia afloat, even if there's a slowdown in global growth," Yudaeva said. "In that sense, the Russian economy may be partially isolated."

Saudi Arabia has raised social expenditures after popular revolutions toppled governments in Tunisia and Egypt. Russia, the world's largest energy exporter, needs oil prices to average $125 a barrel over the next three years to balance its budget, according to the Finance Ministry. Urals crude, Russia's main export blend, fell today to $114.37, the lowest since July 6.

Articla ©2011 BLOOMBERG L.P. ALL RIGHTS RESERVED; article also appeared at www.bloomberg.com/news/2011-08-03/saudi-social-spending-to-support-russia-for-years-sberbank-says.html

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