The fall of crude oil prices below USD 80 a barrel proves that Saudi Arabia's reliance on petroleum revenue is "dangerous", billionaire Prince Alwaleed bin Talal said today.
"Clearly the fact that the price of oil went down to below 80 proved that we were correct by asking the government to have other sources of income", Alwaleed told reporters in the Red Sea city of Jeddah.
"Saudi Arabia depends 90 per cent on oil, which is not right, it's wrong and it's dangerous, actually," added the prince, who is a nephew of King Abdullah.
The prince, whose investments span a range of sectors including global media and hotel brands, spoke as the benchmark US crude price hit a three-year low of USD 75.84 today before recovering slightly.
Brent North Sea crude dropped to USD 82.02 at one point -- its lowest level in four years.
Prices had already begun falling heavily yesterday "after it was reported that Saudi Arabia cut its selling price to the US possibly in a bid to compete with US shale oil", Singapore's United Overseas Bank said in a note to clients.
The kingdom is the biggest producer in the OPEC oil cartel, which is to hold a key production meeting on November 27 in Vienna.
International Monetary Fund chief Christine Lagarde has warned that oil-dependent Gulf states will face budget shortfalls if the decline in oil prices persists.
They have fallen sharply since the middle of June owing to a global supply glut.
Alwaleed said the price fall points to the need for Saudi Arabia to have "an active sovereign wealth fund and to put in it all the excess foreign exchange that you have, all the money you have, and have it earn somewhere between five to 10 per cent."
This would be similar to the sovereign funds in Kuwait, Abu Dhabi and Norway, he said during a visit to the site of Kingdom Tower, a mixed-use facility that will rise more than one kilometre and will be the world's tallest tower.
Alwaleed's Kingdom Holding Co is a founder of the company developing the project.
Saudi Arabia said in June it was preparing to launch its first sovereign wealth fund.
