Saudi Arabia's economy is driven by oil. Along the lines of 60+% of GDP vs our -1% of GDP.
SA NEEDS oil at about $100 bbl just to afford its governmental requirements.
It'll hurt our companies in the short haul, but those that survive will do okay in the long haul.
Saudi Arabia has cash reserves that can last them 2-3 years, with oil at $50 bbl, but seeing that we've been at this for a little while now...
Currently $44.45
Also, other countries are also heavily dependent on oil.
(Think Russia)
Saudi Arabia is trying to crash Iran.
Just remember who Iran is close with.
(Think Russia)
Personally...I think 6 months, maybe a year, before Saudis blink.
JMHO
Not a problem. The U.S. government is piling up debt, laundering it through CITI and handing that money over to Saudi Arabia to "cover the loss". Obama's way of screwing us over by hurting the domestic oil producers and piling up more debt. Sure we have cheap gas. That keeps your attention off what the other hand is doing.
For backgound see link or just Google Saudi CITI oil launder for yourself.
Saudi Arabia’s actual deficit is expected to be somewhere between US$39 billion and $53.3 billion in 2015. They have around US$750 billion in currency reserves.
That does not include immense non-cash holdings, including those of the Royal Family. In addition, most workers in Saudi Arabia are foreign workers. If the economy won’t support them, they don’t get unemployment comp. — they go home. (On the other hand, retaining most of those skilled workers, at least in the oil & gas business, may be one reason Saudi has focused on steady production by volume, instead of steady GDP.)
This is not the whole picture by any means, but since Saudi’s GDP is not all that large, I believe they can survive a 20-30% contraction of GDP for several years. The Saudis are well experienced in such swings. It is also worth noting that their huge investments in their petrochemical industry (plastics production, etc.) are about to come online, which means that “column” is about to go from big expense to big income, shortly. They have some of the lowest cost raw materials in the world...
Last, and perhaps most important, Saudi Arabia no longer has the best hand in the price game. They themselves have said $100 bbl oil is never to be seen again. (”Never” seems a bit drastic — perhaps the translation is really more like “in our lifetimes”?) There is a LOT of oil out there at not over $50-$60 bbl, and more to come. Barring major geopolitical crises, that should set a sort of ceiling in years to come.