Saudi Arabia may go broke before the US oil industry buckles

telegraph.co.uk ^ | 9:59PM BST 05 Aug 2015 | Ambrose Evans-Pritchard

[ckilmer]

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 $62.05, implying a drastic change in the economic landscape for the Middle East and the petro-rentier states.

[onyx]

Social spending is the glue that holds together a medieval Wahhabi regime at a time of fermenting unrest among the Shia minority of the Eastern Province, pin-prick terrorist attacks from ISIS, and blowback from the invasion of Yemen.

Unless President Cruz, Trump or Walker dissolves the EPA immediately after taking office, that despotic agency will be the Saudi's Santa.

[Lonesome in Massachussets]

BWA-HA-HA-HA

I like the numbers for Venezuela. And Russia.

[2001convSVT]

“Saudi Arabia may go broke before the US oil industry buckles”

It may be a lot shorter than 2 years, because the Saudi’ are spending a lot on their involvement in Yemen and in the new Middle East arms race (two nuclear reactors and a bomb program aren’t exactly cheap).

[thackney]

The Saudis make plenty of money off $60 barrel oil.

The Saudi's problem is not the cost to produce each barrel of oil. Their problem is the amount they spend on everything, compared to the barrels they sell.

Arabia Maintains Spending Plans in 2015 Despite Oil Slide
http://www.wsj.com/articles/saudi-arabia-maintains-spending-plans-in-2015-despite-oil-slide-1419507064
Dec. 25, 2014

The International Monetary Fund and others estimate a Saudi Arabia’s fiscal break-even price for oil at well above $90 a barrel—it has been trading recently under $60—underlining the country’s vulnerability to changes in the energy market.

“It is worrying when the expanding government expenditure begins to erode the financial surpluses built over the last few years,” Saudi economist Fadhil Albuainain said.

Saudi Arabia said on Thursday that it projects total expenditure in 2015 to reach 860 billion Saudi riyals ($229.3 billion), an increase of nearly 1% from the last budget, a record. It will likely use cash from its reserves to spend on development projects in sectors such as health care and education. The kingdom expects to run a wider deficit of 145 billion riyals to continue with its spending plans, as projected revenue falls by nearly a third to 715 billion riyals, according to a finance ministry statement.

[dfwgator]

Saudis should be taking in all of those Muslim refugees invading Europe.

[central_va]

The Saudis will have to settle for gold toilets instead of platinum.

[thefactor]

Does this mean they and their family members will only get a new 747 every OTHER year now?

[CorporateStepsister]

Afraid so I believe.

[hinckley buzzard]

Isn't Saudi production cost still in the single digits?

[smokingfrog]

Isn't Saudi production cost still in the single digits?

I think so. The problem is they spend to much and don't seem to have much of a back-up plan for OPEC's failures or when their oil wells start to run dry.