Sounds crazy I know but some people are forecasting this!
Rationale is firstly that the Saudis have badly mishandled the oil price. They increased oil production to drive down oil prices and to damage the US oil shale business.
However the crafty Americans managed to cut costs and at the same time increase oil production to record levels. Meanwhile the Saudi oil revenues are below budget forcing them to issue bonds to raise money.
The reserves peaked at $737bn in August of 2014. They dropped to $672 in May. At current prices they are falling by at least $12bn a month.
Now the Saudis are in a difficult position, if they increase production to reduce prices further then they damage their own revenues to critical levels.
If they cut production to drive prices up then the US shale oil industry will take advantage of the higher prices and increase production so blocking the US market for Saudi exports.
The contract price of US crude oil for delivery in December 2020 is currently $62.05 which does not look good for Saudi.
Secondly the Saudis had 50 years of high revenues but failed to invest in developing any alternative industries to generate the revenues they need, 90% still from oil. :eek: :eek:
Will Saudi go bust in 2018?
Rationale is firstly that the Saudis have badly mishandled the oil price. They increased oil production to drive down oil prices and to damage the US oil shale business.
However the crafty Americans managed to cut costs and at the same time increase oil production to record levels. Meanwhile the Saudi oil revenues are below budget forcing them to issue bonds to raise money.
The reserves peaked at $737bn in August of 2014. They dropped to $672 in May. At current prices they are falling by at least $12bn a month.
Now the Saudis are in a difficult position, if they increase production to reduce prices further then they damage their own revenues to critical levels.
If they cut production to drive prices up then the US shale oil industry will take advantage of the higher prices and increase production so blocking the US market for Saudi exports.
The contract price of US crude oil for delivery in December 2020 is currently $62.05 which does not look good for Saudi.
Secondly the Saudis had 50 years of high revenues but failed to invest in developing any alternative industries to generate the revenues they need, 90% still from oil. :eek: :eek:
