First, I generally agree with allendale. Succession has become muddled and the deputy crown prince is acting like king already in some of his idealistic appearing actions. Frankly I see the house of Saud in a panic having sown the wind in their price crashing actions. It is a strange.
Liquidation of Saudi investment portfolios is a factor that a lot of people miss and I believe it is real and having an impact on our markets. The shutting down of the Al Jazera network here is not just happenstance or loss of viewership. They knew what they were getting into when they started it and they are cutting out costs that are even minor.
I don’t think they are in real trouble yet but I don’t think they thought through the end game of their ploy or the risks of it either. They are going on two years into their scheme and I calculated that the sovereign fund could subsidize an oil price much higher than it is now for about 5 years. The clip of harvest of their nest egg has been faster than I projected.
Positioning for the long haul by offering their refining side of Aramco? I’m missing what this does in the long haul. What I see is something I don’t want to own. A company controlled by a majority and other shareholders with no say so and not a whole lot of arbitrage. I’ve seen that play before and want none of it.
Personally, I see just the opposite. I see them making long term plans to effectively survive the "low oil prices for longer" better than most of the other OPEC nations.
They are investing more for future production. They are investing significantly for refining and petrochem. They borrowed more long before their credit rating dropped while they still had years of cash reserves.