Saudi Arabia may go broke.

[Rockstar]

What do they say over there, Ins'allah god is great?

by Ambrose Evans-Pritchard
If the oil futures market is correct, Saudi Arabia will start running into trouble within two years. It will be in existential crisis by the end of the decade.

The contract price of US crude oil for delivery in December 2020 is currently $US62.05, implying a drastic change in the economic landscape for the Middle East and the petro-rentier states.

The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market and drive out rivals, boosting their own output to 10.6 million barrels a day (b/d) into the teeth of the downturn.

Bank of America says OPEC is now "effectively dissolved". The cartel might as well shut down its offices in Vienna to save money.



Read more: http://www.afr.com/business/energy/o...#ixzz3jrcKq1u3
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[mapuc]

Is this true ?

Thinking of all these conspiracy stories and all these stories which has debunked them

Just curious

Markus

[Platapus]

They have nothing to worry about. The US will bail them out.

The Saudis know where a lot of American skeletons are buried.

[Onkel Neal]

Haha, ok, let me get my tinfoil hat.

At some point, the Saudis will end up in a bind, they are driving the price of their only real commodity down, and there are more and more reserves being found, in Canada, in the Arctic. Basically, right now they are effectively transferring their treasure to the West at cut rate prices.

[em2nought]

Bank of America are hardly experts on financial matters.

[Oberon]

It's a crisis of their own making, they're literally cutting their nose off to spite Iran.
Still, this was going to happen one day, it was inevitable...if not because of reduced demand then because of Peak. The Saudis have a helluva lot of cash squirreled away in assets and such. I think I read somewhere that they have a reserve of $900b. Of course, with the lifestyle that their Princes lead that's probably enough to last a week...

But yeah, Platapus is right, the US will bail them out eventually, because no one in the GOP would stomach the US siding with Iran on anything so the US will have to side with Saudi Arabia against Iran in the coming Middle Eastern cold war.

[Wolferz]

What goes around comes around, usually to bite your behind.

[Jimbuna]

The day oil runs out will surely come eventually but Saudi Arabia are still the worlds largest producer and exporter of oil, producing between 8 and 12 million barrels per day with one quarter of the world’s known oil reserves – more than 260 billion barrels.

That's an awful lot of money still to be added to the vast amount they already have and one article I've read suggests the Saudis will become a net oil importer by 2030.

[soopaman2]

Did Chicken Little write the article?

I looked up, the sky is where it should be, the Saudis got enough money to fund ISIS so they should be OK fiscally.

[20000 Leagues]

OPEC has made a habit of using oil production to influence pricing for decades. By doing so, they also had influence over policies of other countries. North American production was eroding that influence, as did a major drop in overall consumption. The Saudi's will suffer reduced gains by flooding a market already in an oil glut, but they won't be in the red anytime soon. It was actually a smart play on their part. Sure they'll get less for their oil in the short term, but their oil is much cheaper to extract than shale or oil sands.

The Saudi's can wait out the more expensive producers. Once some of them close shop, OPEC can crank the prices back up. When the other producers invest and start pumping oil again, the Saudi's can rinse and repeat as necessary.

Of course, this is the opinion of a casual foreign affairs observer. It's tough to speculate as to what motivation any of them have. The Saudi's may not have seen the glut coming. Most thought China was going to completely outpace the U.S. and drive the global economy. I was of the opposite opinion. Mainly because China is still communist and they also have a tendency to hide their scrapes and cuts. I had a discussion on another forum a couple years ago where I was in the minority in predicting China was an economic bubble waiting to burst.

[ikalugin]

Implying that there is any degree of communism or even socialism in PRC.

[Oberon]

Originally Posted by ikalugin

Implying that there is any degree of communism or even socialism in PRC.

Well, it's not exactly a democracy either.
20000 Leagues has got it pretty spot on, IMHO, because let's face it at the early part of the 21st century everyone thought that China was the new big bad. The usual prepper suspects in the US were preparing for the inevitable time that the Peoples Liberation Army Navy landed its marines in San Francisco and begun the invasion of America. Heck, the new Red Dawn was going to have the PRC as the bad guys until it realised that this would mean that it couldn't actually sell the film in the PRC.
Everyone was crying into their root beer that the Chinese were going to overtake America as the worlds number one superpower by 2020 and America was doomed.
Then we found out just how fragile that miracle growth of Chinas actually was, about how all that boom was built on some very shoddy foundations.
That's not to say that we shouldn't give the PRC a element of respect, I mean it's still a major power to contend with, and no mistake, but I think attributing some kind of mythological deification to it is probably a mistake.

[Catfish]

Fu Man Chu anyone ?
Surely a lot of brave citizens saw those films ..

[ikalugin]

You are implying that socialism is incompatable with democracy? (or theoretical comunism for that matter)

[Oberon]

Originally Posted by ikalugin

You are implying that socialism is incompatable with democracy? (or theoretical comunism for that matter)

Since we've yet to see true examples of either then it's hard to say.