DUBAI, Jan 4 (Reuters) - Scores of Saudi Arabian companies said their earnings could be dampened this year as production costs will increase after state energy group Saudi Aramco (2222.SE) told them it would sharply raise feedstock and fuel prices.

Companies including Nama Chemicals (2210.SE) and Saudi Ceramic (2040.SE) said in regulatory filings that they were notified by the energy giant on Wednesday that as of Jan. 1 retail diesel price for 2024 would rise by 53% to 1.15 riyals ($0.3067) per litre, its third increase since 2016.

While it remains low compared U.S. prices of $3.979 a gallon, or $1.051 a litre, as reported by the American Automobile Association, the hike still marks a substantial cost increase.

Qassim Cement (3040.SE), Saudi Aramco Base Oil Co. (2223.SE) and Rabigh Refining and Petrochemical (2380.SE) were also among companies that warned of the impact of the price increases in regulatory filings late on Wednesday and Thursday.

Natural gas and other fuel prices will also rise but the companies did specify how much.

The companies said they could start feeling the impact in the first quarter and were looking for ways to improve efficiencies to offset the rising costs.

Saudi Aramco did not immediately respond to a request for comment when contacted by Reuters on Thursday.

Saudi Arabia's Tadawul stock index fell 1.6% in early trading on Thursday, weighed down by petrochemical and cement stocks.

The price rises are part of domestic fuel price reforms initiated by Saudi Arabia's government. The reforms began in 2016 in response to lower oil prices at the time, boosting gasoline, diesel and electricity prices the following year, as the kingdom sought to gradually eliminate energy subsidies.

"While the market is taking the news negatively, investors were aware of a potential increase given how low prices were," said Yousef Husseini, director at EFG Hermes' equity research division.

"I think most investors as well as producers viewed it as inevitable but there was no clarity at how large the increases could be nor the timing," Husseini said.

Middle East Company for Manufacturing and Producing Paper on Thursday (1202.SE) said it expected its total annual sales costs to rise by about 3% due to the fuel price hike.

Saudi Industrial Investment Group also spoke of higher production costs for its subsidiaries, but did not specify the impact.

Rising costs associated with the development of the kingdom's Jafurah gas field, may have led Aramco to take the decision to hike prices now, said Husseini, who covers Aramco and Saudi Arabia's petrochemical sector.

Jafurah is the kingdom's biggest unconventional non-oil associated gas field, which in 2020 was estimated to require investments of $110 billion. It is potentially the biggest shale gas development outside of the United States.

"It is a massive field that will likely have higher production costs than the associated fields, so makes sense to push through an increase with the start-up of operations from this field,' Husseini added.

($1 = 3.7500 riyals)

https://www.reuters.com/markets/commodities/saudi-arabian-companies-warn-aramco-fuel-price-hike-may-curb-earnings-2024-01-04/