RIYADH, Sept 10: Saudi Arabia’s trade deal with Washington removes its biggest hurdle to joining the World Trade Organization but a European Union official said on Saturday the oil giant must still address EU questions over Saudi gas prices.

The world’s biggest crude exporter signed a bilateral market access deal with the United States on Friday in a low-key ceremony which should pave the way for Saudi accession to the WTO by December — 12 years after it first sought membership.

The Opec producer has already signed a similar accord with the European Union. But that deal, signed in 2003, left two issues outstanding.

“One related to insurance, which has now been cleared up, and the other was on (gas feedstock prices for) petrochemicals,” said Bernard Savage, EU delegation head in Saudi Arabia.

He said petrochemicals producers in Saudi Arabia obtained natural gas — a raw material in the production of petrochemicals — at rates below international prices, putting producers in Europe at a disadvantage.

“We have been having discussions with the Saudis on this,” Savage told Reuters, adding he did not believe the issue was an insurmountable obstacle to the kingdom’s WTO accession.

“The objective is for Saudi Arabia to join the WTO formally at the Hong Kong ministerial meeting (in December). That is our objective and that is the Saudi objective,” he said.

Joining the WTO will boost investor confidence in a country which is reaping the rewards of record oil prices but which has until recently, shown little urgency in liberalizing its economy or setting clear a legal framework for business.

Shares on the Saudi stock market — the biggest in the Arab world — rose nearly 3 per cent in afternoon trade on Saturday to around 14,700 points.

“The US deal is a sign of confidence in the Saudi economy which will encourage the market,” National Commercial Bank chief economist Saeed al-Sheikh said.

The US deal requires Saudi Arabia to open its markets to more US farm and manufactured goods as well as service firms in sectors including banking, telecommunications, energy, express delivery, transport and hotel and restaurant management.

In return economists say the kingdom can expect increased investment flowing from greater confidence in its commercial legal framework. “Foreign businessmen feel there is a legal infrastructure they can rely on — that there is a channel for disputes,” said Brad Bourland, chief economist at Samba Financial Group.—Reuters