Saudi Arabia to run out of cash in less than 5 years

Discussion in 'Economics' started by Sotnis, Oct 26, 2015.

  1. Sotnis


    Saudi Arabia, the world's largest oil producer, needs to sell oil at around $106 to balance its budget, according to IMF estimates. The kingdom barely has enough fiscal buffers to survive five years of $50 oil, the IMF said.

    That's why Saudi Arabia is moving fast to preserve cash. The kingdom not only raised $4 billion by selling bonds earlier this year, but its central bank has yanked up to $70 billion from asset management firms like BlackRock (BLK) over the past six months.

    The Saudi's started all of this and but do they know exactly what they are doing?
  2. Damn!!!!!
    I am now regretting not to have analysed 2 years ago the impression shared by one person, that Saoudi Arabia was playing with fire, and that their rulers' might end up becoming political refugees in some Western Countries within 10 years. But that a possible scenario could come up through this way, was beyond my imagination.
  3. I was kidding.
  4. Zestilio


    Saudi Arabia were the prime creators of low prices in the first place. They control OPEC, they wanted low prices to drive out competitors especially the new US/Canadian fracking operations that are not profitable at such prices. If they need to raise prices, they can do so at any time. Furthermore, by this metric the US and many other first-world countries "ran out of cash" decades ago, when they began running budget deficits beyond their cash reserves. This is a sensationalist headline which completely lacks context.
  5. Those countries generally have sophisticated economies and export things other than just oil. 90% of Saudi exports and about 90% of government revenues come from oil.

    The instant oil prices start to rise, fracking operations will start coming online to meet demand. This isn't the 1980s any more, the Saudis can't turn off the tap like they once could.