Oil Wars Biting: Saudi Arabia to Start Issuing Bonds to Cover Deficit

garg_bharat

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Saudi has large reserves which will take time to run out.

This game is against Russia primarily. Russian reserves may exhaust in two years while Saudi may last 5 years.

However Saudi may still end up losing this game as Russia has much superior internal economy and can survive even without selling oil.
 

DarthVader

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We might also be able to buy oil from Iran in Indian rupees instead of US dollars. Will be good for our economy.

Also, Saudis being unfit and inexperienced is exactly the reason why they need to spend more on equipment. Since their forces are not that capable, they have to rely on machinery. And maybe some percentage of that budget goes into terrorist funding as well.
Well..true that.....the big game is to destroy Americas shale oil and oilsands industry by flooding the market with cheap oil...big idea is that Saudis can pump out oil for 3-5$ a barrel....while American shale oil needs anywhere from $30-$50 oil...Canadian oilsands need atlest 40$ oil...to be viable...the problem with this big games is....Iraqis are sitting over a pool of oil that might rival that of Saudi arabia and they are itching to expand there markets...while Libya, iran and Syria will eventually ramp back there production...with new massive finds in various parts of the world and waning of demand in China and western countries........we are looking at extended period of gloom.....Saudis may have just bit more then they can chew! ;)...(any questions or disputes please go ahead and ask)
 

Kshatriya87

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Well..true that.....the big game is to destroy Americas shale oil and oilsands industry by flooding the market with cheap oil...big idea is that Saudis can pump out oil for 3-5$ a barrel....while American shale oil needs anywhere from $30-$50 oil...Canadian oilsands need atlest 40$ oil...to be viable...the problem with this big games is....Iraqis are sitting over a pool of oil that might rival that of Saudi arabia and they are itching to expand there markets...while Libya, iran and Syria will eventually ramp back there production...with new massive finds in various parts of the world and waning of demand in China and western countries........we are looking at extended period of gloom.....Saudis may have just bit more then they can chew! ;)...(any questions or disputes please go ahead and ask)
You seem to know something about the oil prices. Please project the oil prices in coming years for me. As I'm in Oil & Gas field, it is going to affect my career in a big way.
 

Illusive

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my only concern is how will it effect saudies in the long run as they have a very small population to feed and as they make billion even from mecca and madina pligrimage every year ?
True, not to forget plenty of asslickers to fill in for cheap labour to industrialize if they ever venture towards it. Also most of these spending are just lavish. If they control that, plus their huge defence spending, they'd be able to at least buy more time for a different strategy.
 

DarthVader

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You seem to know something about the oil prices. Please project the oil prices in coming years for me. As I'm in Oil & Gas field, it is going to affect my career in a big way.
On a day to day bases...nobody can project what oilpices would be like....but as far as medium to long term goes I can not foresee a future for atlest the next 2 years...with oil breaching the ceiling of $50 for any significant period of time....unless offcource...somebody nukes saudiarabia....in that case $200 oil is a possibility at least for a short while :p...again there is a ton of production capacity and demand is lagging...Chinese economy seems like a dying horse...no matter how much adrenalin you pump into it...it just keeps responding less and less.....so china's new normal rate of growth is 5% or significantly less....this does not bode well for oil or most other mineral commodities for that matter :/...
 

Kshatriya87

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On a day to day bases...nobody can project what oilpices would be like....but as far as medium to long term goes I can not foresee a future for atlest the next 2 years...with oil breaching the ceiling of $50 for any significant period of time....unless offcource...somebody nukes saudiarabia....in that case $200 oil is a possibility at least for a short while :p...again there is a ton of production capacity and demand is lagging...Chinese economy seems like a dying horse...no matter how much adrenalin you pump into it...it just keeps responding less and less.....so china's new normal rate of growth is 5% or significantly less....this does not bode well for oil or most other mineral commodities for that matter :/...
I know. Hundreds of thousands of people in oil & gas industry have lost their jobs. I'm fortunate to still have one. But need the industry to go back to normal for employment and salary raises to sustain.
 

DarthVader

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True, not to forget plenty of asslickers to fill in for cheap labour to industrialize if they ever venture towards it. Also most of these spending are just lavish. If they control that, plus their huge defence spending, they'd be able to at least buy more time for a different strategy.
With extended instability in middle east....coupled with low oil prices are going to be pain in auschwitz of Saudis...a dictator is only popular until he can dole out the goodies....goodies are getting hard to come! :)
 

DarthVader

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I know. Hundreds of thousands of people in oil & gas industry have lost their jobs. I'm fortunate to still have one. But need the industry to go back to normal for employment and salary raises to sustain.
Man be glad that you still have a job...in US and specially Canada there is a scene of Madmax apocalypse in the oil and gas :p...even the mineral industry is pretty dead!
 

Kshatriya87

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Man be glad that you still have a job...in US and specially Canada there is a scene of Madmax apocalypse in the oil and gas [emoji14]...even the mineral industry is pretty dead!
Yeah. I get about a dozen messages everyday on LinkedIn from Americans, Malaysians and Indians asking me for jobs.

Sent from my Nexus 5X using Tapatalk
 

sorcerer

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A Kingdom Coming Undone


By Sagatom Saha Read bio
As Saudi Arabia embarks on a rocky journey to economic diversification, the U.S. should offer help — but not unconditionally.

Though some find reason for optimism in Saudi Arabia’s National Transformation Plan, the roadmap to economic diversification released earlier this year, there is little realistic prospect for a smooth transition. The very push toward reform, while noble and necessary, could propel Saudi Arabia toward political instability. Recognizing this, the United States should encourage Riyadh by offering high-level coordination and technical expertise but not unconditional support even as the Kingdom struggles.

Far from “a revolution here disguised as economic reform,” as some have called it, the situation is more simply described as a series of choices, ranging from risky to dangerous, that are being forced upon the Saudi government by a lack of planning when the Kingdom was flush with cash, a social contract underwritten by welfare spending, and a foolish faith that high oil prices would persist.


Saudi Arabia is embarking on its economic transformation under two principal budgetary burdens: demographic change and collapsed oil prices.

First, the Saudi adult population will more than double in the next fifteen years, driving subsidies and other government payments to unsustainable levels. The creation of private-sector jobs is the obvious answer for a country whose government employs 70 percent of its working citizens, but the sheer numbers show the difficulty. Executing the National Transformation Plan would require the creation of six million new jobs by 2030 — more if women enter the workforce in larger numbers — and yet the 2003-13 oil boom created just one-third that many. The Kingdom’s currently aims to create 450,000 non-oil jobs before 2020, and yet it would need to create 226,000 jobs a year just to accommodate new entrants to the labor market.

In the meantime, declining global energy prices are draining funds for reforms projected to cost an estimated 4 trillion dollars. Moreover, Saudis rely almost entirely on domestic diesel and natural gas for power; at current rates demand will cut two million barrels a day from exports by 2020 further paring cash to commit to reform

These pressures have already prompted several unprecedented moves, including the decision to float a partial initial public offering (IPO) of Saudi Aramco and the effort to eliminate fossil fuel subsidies. Deputy Crown Prince Mohammad bin Salman introduced the IPO as an incentive for transparency and counter to corruption.

Yet transparency might also bring instability. Saudi Arabia, more so than any other OPEC monarchy or Gulf Arab autocracy, maintains an expansive and intricate network of royal family members, many of whom play an active role in shaping the country’s political direction.

Oil profits have long bought compliance from Saudi Arabia’s expansive and intricate network of royal family members, and shedding light on Saudi Aramco’s books endangers that long-standing bargain. Already, senior princes have allegedly called for regime change, expressing extreme distaste for the country’s new direction and the deputy crown prince himself.

On the other side of the political spectrum, plans to remove subsidies and reduce public spending invites the prospect of widespread social unrest. Saudi Arabia likely sidestepped the wave of unrest in 2011 only because of its generous oil-financed welfare system, but earlier this year, Saudi construction workers who had not received wages in months torched buses in Mecca, demonstrating that the conditions that produced the Arab Spring remain a looming concern. Assuming cuts without consequence will propagate poor policy and has a poor track record.

It is overly optimistic to assume that Saudi Arabia has the resources, the urgency, and the talent needed to swiftly push into a post-oil future. Nor can foreign investment be counted upon to pour into the country, creating the millions of jobs necessary.

More likely, the Kingdom will find the road ahead enormously difficult. Destabilization could take several forms; among them, bloody power struggles within the ranks of royal family or violent political unrest echoing the Arab Spring.

This is not to say the United States should back away from its commitment to Saudi Arabia. Instead, the next administration should act to mitigate these possibilities. First, it should prioritize economic issues at the highest level between U.S. and Saudi officials. To advance climate action, President Obama required all bilateral meetings to raise the issue, prompting world leaders to raise it in advance. A similar principle should apply here.

Second, the next president should make clear that the United States will not pursue investments in the Kingdom that intermingle the American economy with theirs. U.S. policy should not provide Saudi leadership with a false sense of implicit U.S. backing.

However, U.S. officials can encourage Saudi efforts by offering technical expertise. The United States could help the Kingdom design programs linking reform to assistance for poorer Saudis to avoid unrest. Saudi Arabia should not rely exclusively on consultancies as it charts a new, decades-long course.

The path forward on Saudi Arabia is not a binary choice between greater support and complete disengagement. There is a middle path, where U.S. officials can advise and assist where possible and prepare for trouble where it is likely.

http://www.defenseone.com/ideas/2016/10/kingdom-coming-undone/132775/?oref=d-river

Uh oh!!!
 

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