Dubai: The Saudi Arabian riyal fell near to a record low against the US dollar in the one-year forwards market on Thursday in response to a fresh slide in oil prices.

One-year dollar/riyal forwards climbed as high as 825 points in very volatile trade. Their record high is 850 points, recorded during a previous bout of speculation against the riyal in 1999, according to Thomson Reuters data.

A level of 825 points implies a depreciation of the riyal of 2.2 per cent over the next 12 months. The riyal is pegged in the spot market at 3.75 to the dollar; some banks and funds use the forwards market to hedge against the risk that the peg might eventually be broken.

Many bankers in the Gulf think Saudi Arabia remains very unlikely to devalue its currency because the benefit to state finances from higher oil revenue, following conversion from dollars to riyals, would be more than outweighed by a surge in import costs and a market panic.

But Brent oil futures sank more than 4 per cent on Thursday to below $33 a barrel for the first time since April 2004, putting fresh pressure on Saudi state finances.