Aramco oil facility near al-Khurj area, just south of the Saudi capital Riyadh on Sept. 15, 2019.Fayez Nureldine | AFP | Getty ImagesDUBAI — Saudi Arabia’s strong credit rating has been taken down a notch by a major ratings agency thanks to geopolitical risks and concerns over the safety of its economic infrastructure.Fitch has downgraded the kingdom’s long-term foreign currency issuer default rating from A+ to A, the New York-based agency announced Monday. Its outlook remains stable.”The downgrade reflects rising geopolitical and military tensions in the Gulf region, Fitch’s revised assessment of the vulnerability of Saudi Arabia’s economic infrastructure and continued deterioration in Saudi Arabia’s fiscal and external balance sheets,” Fitch said in a release.The downgrade comes roughly two weeks after the heart of the kingdom’s oil infrastructure was hit by a drone and cruise missile attack that Riyadh and Washington have blamed on Iran.Riyadh was quick to rebuke the agency’s move. “The Ministry of Finance is disappointed that Fitch took a swift decision to downgrade the Kingdom,” read a statement issued by Saudi Arabia’s finance ministry within a few hours of Fitch’s announcement. “Rather, the event highlights Saudi Arabia’s outstanding capacity to effectively deal with adversities, commitment to maintaining stability in the global oil markets, and the Kingdom’s status as an important international ally,” it said.”As such, the downgrade of the rating comes across as somewhat speculative without direct reference to the swift, decisive and effective response to the event,” the ministry added.The pre-dawn attacks on September 14 hit two of state oil giant Saudi Aramco’s largest oil facilities, Abqaiq and Khurais, forcing the country to temporarily shut down roughly 50% of its output, or 5% of the global oil supply. The following Monday, international benchmark Brent crude rose as much as 19.5% to $71.95 per barrel at the open — the biggest jump on record — before paring gains.”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,” Fitch said. “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.”
