Is Saudi Arabia going broke?

I found an interesting article today and thought I would share.
This scenario opens up all kinds of possibilities for the Middle East and the rest of the world. Oil sales makes up a huge piece of some countries economies such as Russia and Venezuela. Cheap gas brought down the Soviet Union so I wonder what will fall next?

www.telegraph.co.uk...

Below are a few clips from the article..


"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 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 10.6m barrels a day (b/d) into the teeth of the downturn."


"By causing the oil price to crash, the Saudis and their Gulf allies have certainly killed off prospects for a raft of high-cost ventures in the Russian Arctic, the Gulf of Mexico, the deep waters of the mid-Atlantic, and the Canadian tar sands."

a reply to: Bluntone22

Saudi Arabia will be just fine. As John Kerry just publicly admitted, the reason gas prices are so low is because Obama pressured China and several other countries to stop buying oil in order to bring Iran to the negotiating table.

Now that the deal has been signed, those countries are buying oil again and gas prices are going back up. Expect them to go WAY up in the coming months.

There was some news blurb on the elevator TV at work last Thursday that made me think the exact same thought. Wish I could remember what it was.

ETA: Something about issuing bonds.

These were the blurbs on the elevator TV that day:

* MIDEAST STOCKS-Bourses fall as China pressures oil and equities
Dollar/Saudi riyal forwards jump to 12-yr high on liquidity concerns

* ABB wins $150 mln order for Saudi Arabian substations

* Saudi bond market stirs as kingdom seeks $27B

* Former Saudi official presses for change in managing oil wealth

When they run out of oil money, the "kingdom"
will be in really bad shape.
Right now they subsidize a fantastic lifestyle
for all the male citizens of the kingdom.
Once the money runs out, the Islamic State
of Daesh will rush in and the discontented
males will run to the Islamic State and
overthrow the kingdom.

It will be inevitable.

Once solar power becomes feasible
or a true Tesla like source of power
is rediscovered and implemented,
and individuals and businesses can
purchase their own power producers,
as has happened with all technology,
then the demand for oil will fall
and the Saudi kingdom will fall.

When you put all your financial
eggs in one basket, when the
basket runs out or
the items in the basket are
no longer wanted/needed,
this is bound to happen.

It will happen sooner or later because
Saudi relies on only one industry - and
an industry that many are trying
very hard to end the need for -
and will succeed eventually.

a reply to: Bone75

Well it's all going to depend on the oil prices. The American and Canadian oil fields pumping out $4 gas really kicked the gulf in the butt. When the price goes up, we pump. When it goes down, we buy theirs.
Time will tell I guess.

a reply to: Bluntone22

It was mentioned on the news a while back that Saudi breaks even on the extraction of their oil at $20 a barrel. Canada's break even point is $44 a barrel.

Saudi won't go broke until they finish breaking the rest of us....

Oil is down around $42 a barrel right now.

originally posted by: snowspirit
a reply to: Bluntone22

It was mentioned on the news a while back that Saudi breaks even on the extraction of their oil at $20 a barrel. Canada's break even point is $44 a barrel.

Saudi won't go broke until they finish breaking the rest of us....

Oil is down around $42 a barrel right now.

I think the cost of extracting the oil is $20 a barrel.
The article say they need $105 a barrel to have the revenue for their 2015 budget.
They don't have any other significant form of income to support their heavily subsidized economy.

a reply to: Bluntone22

The opulence cannot be sustained.

The shift towards a healthier, cleaner future will not do them any good. You see the extravagant hotels, the absurd infrastructure ideas, it cannot be sustained.

Sooner or later that well of fossilized wealth will either be depreciated in value due to external influences, or their stockpiles will be 'swindled' by external influences. It's a lose-lose.

originally posted by: Bluntone22
a reply to: Bone75

Well it's all going to depend on the oil prices. The American and Canadian oil fields pumping out $4 gas really kicked the gulf in the butt. When the price goes up, we pump. When it goes down, we buy theirs.
Time will tell I guess.

Average gas prices will be hovering around $5 a gallon by the end of September, mark my words.

a reply to: Bone75


I hope your wrong,,lol
With elections coming up soon it's hard to say.
I'm not sure gas prices really has much to do with oil prices anyway. Gas is $2.99 here and oil is $42 a barrel.
When gas was $4.00 a few years ago, oil was $150 a barrel.
Those numbers just don't jive...

originally posted by: Bone75
a reply to: Bluntone22

Saudi Arabia will be just fine. As John Kerry just publicly admitted, the reason gas prices are so low is because Obama pressured China and several other countries to stop buying oil in order to bring Iran to the negotiating table.

Now that the deal has been signed, those countries are buying oil again and gas prices are going back up. Expect them to go WAY up in the coming months.

i think this was more to harm russia.
as the ukraine crisis began, oil prices went down and russia's economy crumbled.

we have economical and cyber ww3 right now it seems.

If they do go broke, who's going to buy all the hideous, tacky furniture?

Saudi and a host of oil producers will 'go broke' in trying to sell the dirty crude they have left in those oil fields...all the sweet-light oil is gone.... and the UN agendas for sustainability are going to run head-on into the same principal which ' dirty-nasty COAL' is confronting right now

coal and dirty oil needs a great expense to be recognized as viable energy source around the world
as of now, the petrol being sold on the market is a rancid pollutant requiring a great deal of 'clean-up' to be considered a sustainable resource of energy

the guillotine comes down on soft Christian necks as well as OPEC power houses economies in these NWO/agenda 21 & 2030 Schemes

a reply to: snowspirit

The break-even point is where they can recover the oil extraction costs, not when they can fund their government budget.

originally posted by: StanFL
The break-even point is where they can recover the oil extraction costs, not when they can fund their government budget.

All that matters is the break point. As long as the sales price is above the break, they can borrow until their borrowing costs exceed the difference between the break and the sales price. Which, is currently enough money to cover SA's government funding shortfalls for the foreseeable future.

Also, SA has fairly sizable investment portfolios they could slim down, if required.

They aren't going 'broke' for quite some time.

lol . let me explain .

This "gamble" they made was in order to put even more and more pressure on Iran . Iran's oil exports dropped to 1 million barrels and thus the lowered prices (even 30 dollars a barrel) were crushing Iran's economy .

Iran took a smart decision instead : it increased non-oil exports on the eve of economic collapse . the situation passed and Iran's economy got out of recession even with the sanctions in place . it grow about 1 percent last year .

now how is KSA going bankrupt here ?

well for sure the lowered prices damage them too since they are a major exporter , but they thought it damages Iran more so it's worth it .

now with Iranian sanctions getting lifted , Iran will pump up it's exports : the question is how much ?

Iran has 2 options : 1- to increase the production to a rate that it keeps the prices at this very low level .

2- to increase production and work hand in hand with OPEC to increase the current prices which is desired by KSA as well since their measures backfired .

many experts say that Iran will choose the first option since it can lead KSA to full-economic collapse and teach them a lesson they'll never forget

many others say that Iran will not act childish and it will not damage it's own economy to take back on a backwards state in regards to exports .

in 50 years - when oil is all pumped up - KSA has nothing to offer to the world and automatically collapses as a functioning state

Quantity over quality in a dying industry.

Sell as much as you can when you can for whatever price you can.

Kinda sucks when you have a buttload to sell and the demand paradigm shifts.

Especially when it is the only thing in the storefront.

originally posted by: Thecakeisalie
a reply to: Bluntone22

The opulence cannot be sustained.

The shift towards a healthier, cleaner future will not do them any good. You see the extravagant hotels, the absurd infrastructure ideas, it cannot be sustained.

Sooner or later that well of fossilized wealth will either be depreciated in value due to external influences, or their stockpiles will be 'swindled' by external influences. It's a lose-lose.

Actually I think what you are saying there is actually their Plan B - tourism. All the Football Stars and Rich and Famous who buy in Dubai and the resorts, the funfairs....Its absurd that a Muslim country could be propped up by tourists who dont want Muslim rules but want complete hedonism and freedom, but that opulence is their plan B.

A strategic position, their massive investments will mean their money will outlast their oil and Dubai will be like Hong Kong.

Once the Oil has gone, shale gas will probably be discovered or other resources and sand will probably be a commodity.

They can invest in solar farms and desalination plants whilst the money is there and be protected from the need to burn oil when its gone (I am sure they will have gas deposits or buy gas cheaper than they ever sold oil).

More likely, the remaining families of the Saudi empire will move abroad in relative anonymity with the wealth and leave a crumbling empire to.....crumble whilst them and their kin live off the investments they have made.

The world will be left with an 1980's Ethiopia esque situation and be forced to act with the poorest of the west giving aid via Band Aid and Live Aid types because now its someone else's problem whilst those who raped Saudi will live kings because the steals of their raping and pilliaging will be propping up the west financial markets.

originally posted by: snowspirit
a reply to: Bluntone22

It was mentioned on the news a while back that Saudi breaks even on the extraction of their oil at $20 a barrel. Canada's break even point is $44 a barrel.

Saudi won't go broke until they finish breaking the rest of us....

Oil is down around $42 a barrel right now.

Strange that oil is at $42 yet gas is around $3 per gallon here. When oil was over $100 per barrel gas was only $3.50.

I read a few articles in the past few weeks about this. They had to do a bond issue to keep afloat.

Saudi Arabia has issued bonds worth 20 billion riyals ($5.33 billion), and plans to raise billions more to maintain its spending plans, as the world’s top oil exporter grapples with lower revenues amid a dramatic drop in energy prices.

www.marketwatch.com...