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How Strong is Saudi Arabia Financially?
Posted on 1/20/16 at 10:25 am
Posted on 1/20/16 at 10:25 am
Their margins are slimmer, as are all oil producers. Is the strain on their financial reserves significant?
4
Posted on 1/20/16 at 10:35 am to OTIS2
They still have alot of reserves, yet they are making tough spending cuts and increasing their borrowing. It suggests that they are preparing for a very "lower for longer" oil price scenario. Excluding an open war with Iran, they are probably in the best shape financially of all the major oil exporting countries, imo (not including some of their smaller Gulf States allies).
I'm sure others here have a more in depth take than mine.
I'm sure others here have a more in depth take than mine.
Posted on 1/20/16 at 10:53 am to OTIS2
I listened to an economist recently at a conference who has the breakdown for the Saudi's showing they needed $109/ barrel to be making a profit considering what they're spending currently. At the rate currently with oil below $30 they would deplete their reserves in 5 years.
Posted on 1/20/16 at 10:55 am to Stingray
Relative to other OPEC countries, they are fine. This is becoming a giant game of "uncle".
Posted on 1/20/16 at 11:08 am to Shepherd88
quote:
I listened to an economist recently at a conference who has the breakdown for the Saudi's showing they needed $109/ barrel to be making a profit considering what they're spending currently. At the rate currently with oil below $30 they would deplete their reserves in 5 years.
That's what I'd picked up on in a news story. I agree with the "game of uncle" analogy. I hope a lack of moderation in their spending, and a lack of diversification in their economy kills the mother frikers off.
Posted on 1/20/16 at 11:17 am to OTIS2
There was a great cover story in The Economist two weeks ago on this very topic. If interested, I would suggest you read it.
Posted on 1/20/16 at 11:18 am to schexyoung
Thanks.
Posted on 1/20/16 at 11:25 am to OTIS2
They have 750bn in cash reserves. They are waiting for oil hedges to fall through in the USA to start having a real effect on US oil companies. These hedges are due to expire this year, after which Saudi plans to take over market share due to companies shutting down and downsizing operations to pay off debt. Until then they are producing at a loss to make oil cheaper by flooding the market and making fracking (that had the potential to reduce US dependance on oil imports) uneconmical.
Posted on 1/20/16 at 11:26 am to OTIS2
No problem. This was the cover...
Posted on 1/20/16 at 11:30 am to schexyoung
Found it on line and trying to read among all these pesky client phone calls...
Posted on 1/20/16 at 11:35 am to OTIS2
I hope you found the complete feature and not just one of the briefings. Sometimes that can be really hard to do with The Economists.
Posted on 1/20/16 at 11:46 am to schexyoung
A couple of pages? I presumed it to be the full text.
Posted on 1/20/16 at 11:55 am to Shepherd88
quote:
I listened to an economist recently at a conference who has the breakdown for the Saudi's showing they needed $109/ barrel to be making a profit considering what they're spending currently. At the rate currently with oil below $30 they would deplete their reserves in 5 years.
That's only if they maintain their budget from last year and don't cut spending which they surely will do.
Posted on 1/20/16 at 11:56 am to OTIS2
I likewise hope they get what is their due...strike me as the most disreputable of the entire lot and given their neighborhood that is saying a bunch....am beyond weary of their geo-political influence
Posted on 1/20/16 at 12:07 pm to OTIS2
quote:I guess we'll find out, won't we?
How Strong is Saudi Arabia Financially?
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