PressTV : Saudi going bankrupt

[somebozo]

Common sense demands that if Saudi is so badly affected then what about Iran itself a much small player.?? Saudi has $700B in reserves...Iran has less tha $100B??

Funny?

 

[T-123456]

The Saudi's need a counter propaganda department.

 

[Indus Pakistan]

Common sense demands that if Saudi is so badly affected then what about Iran itself a much small player.?? Saudi has $700B in reserves...Iran has less tha $100B??

Funny?

The Iranian's are far more diversified economy whereas Saudi is a oil addict through and through. If Saudi oil stopped pumping it would starve to death unless they can genetically modify crops to grow in sterile desert. On the other hand Iran's economy would also take a hit but it still would survive. That is not too a small differance.

 

[That Guy]

The Saudis are a long way from bankruptcy. They'll be fine...

 

[Hell hound]

truth be told all saudia need is fake attack on one of it oil facilities or start a mini skirmish in Syria to build up the tension need to rise the oil prices in the market.
saudia is too big to fall.

 

[marbella]

Saudis are so rich they live among the skies. We on earth keep dreaming about them to come to our level.
Low oil prices wont make them poor.its actually good for rest of the world to enjoy cheap oil.

 

[Paksanity]

The Iranian's are far more diversified economy whereas Saudi is a oil addict through and through. If Saudi oil stopped pumping it would starve to death unless they can genetically modify crops to grow in sterile desert. On the other hand Iran's economy would also take a hit but it still would survive. That is not too a small differance.

Well the thing is one can still make profit at $15 /barrel. Money may not be flowing as abundantly but still there is profit without much effort. So bankruptcy? Come on!

 

[somebozo]

Well the thing is one can still make profit at $15 /barrel. Money may not be flowing as abundantly but still there is profit without much effort. So bankruptcy? Come on!

Saudis are planning A strategic move to privatize Aramco refining and distribution ops and much of the investors will be Americans...does not need explanation further than that as we know who is the boss of oil when it comes for Americans to make money!

 

[Indus Pakistan]

bankruptcy

I never said Saudia would go bankrupt anytime soon. Fact is any income trough can easily be handled with cut in spending and reliance on ample reserves and in the extreme bridging loans. Then when inevitably oil price rises the reserves are nourished and or loans paid off. So yes the "bankruptcy" claim is just leveraged on the hostility between Iran/Saudia and should not be treated too seriously.

I even feel (read some articles) that it is possible Saudia has increased oil production at US request to hurt Putin who was getting too cocky on back of healthy oil surplus. The increased Saudi production is hurting Russia bad style as Saudi can produce oil cheaper than Russia.

 

[mohsen]

Common sense demands that if Saudi is so badly affected then what about Iran itself a much small player.?? Saudi has $700B in reserves...Iran has less tha $100B??

Funny?

Let's see how much those $700bn would survive:

Saudi Arabia reports record high $98bn budget deficit on low crude prices — RT Business

 

[somebozo]

Let's see how much those $700bn would survive:

Saudi Arabia reports record high $98bn budget deficit on low crude prices — RT Business

Cost cutting, privatization, investments and inviting foreign capital!
Saudi Arabia has learned good lessons from Iran on surviving bankruptcy!

 

[Skull and Bones]

2 years more of this low crude oil prices below $40, and I don't think people will be laughing much at the report.

 

[mohsen]

One narrative we’ve recounted time and again over the past six or so months revolves around the extent to which Saudi Arabia has put itself in dire financial straits by stubbornly keeping crude prices artificially suppressed in an effort to i) bankrupt the US shale space, and ii) pressure the Russians.

In some respects, pushing prices lower was probably a good gamble as far as the odds are concerned. That is, if one were placing bets last November on whether uneconomic US producers would be able to hold out for a year with sub-$50 crude and on whether Moscow would eventually agree to be a bit more friendly geopolitically speaking once the combination of low oil prices and crippling Western economic sanctions had time to sink in, one would have been inclined to think that Riyadh would have gotten its way by now.

But that’s not what happened.

The cost of capital is still basically zero which has served to keep US oil production online (even as it has fallen from April highs) and as for Russia, well, betting that Putin would give up Assad turned out to be a very, very bad gamble.

And so, the Saudis have found themselves in an awkward position. Competition in the US still isn’t bankrupt (although it’s by no means clear how much longer insolvent American producers can hold out) and the prospects for some kind of Saudi-Qatari-Turkish energy cooperation in partnership with a friendly Damascus are getting more remote by the day.

Meanwhile, the budget deficit has ballooned to some 20% of GDP while the current account is now in the red as well. Fighting a proxy war in Yemen hasn’t helped, and neither has the cost associated with maintaining the lifestyle of the everyday Saudi and preserving the riyal peg.

Riyadh is burning through its SAMA reserves and tapping the debt markets to offset the drawdown but at the end of the day, with crude prices this low the future doesn’t look particularly bright.

In fact, things have gotten so desperate that the Saudis are now trying to muscle in on Russia's Eastern European markets as Chinese demand decelerates along with the economy.

It’s with all of that in mind that we bring you the following from Bloomberg who reports that the kingdom is now delaying contractor payments by as much as six months in the face of the acute cash crunch. Here’s more:

Saudi Arabia is delaying payments to government contractors as the slump in oil prices pushes the country into a deficit for the first time since 2009, according to three people with knowledge of the matter.



Companies working on infrastructure projects have been waiting six months or more for payments as the government seeks to preserve cash, the people said, asking not to be identified as the information is private. Delays have increased this year and the government has also been seeking to cut prices on contracts, the people said.



Saudi Arabia is tackling the slump in crude, which accounts for about 80 percent of revenue, by tapping foreign reserves, cutting spending and selling bonds. Net foreign assets fell by about $82 billion at the end of August after reaching an all-time high last year. The country has raised 55 billion riyals ($15 billion) from debt issuance this year.



The government is also seeking to cut capital spending and delay projects.



“It’s hard to hold back from boosting spending when oil is on the rise, but very hard to cut when oil prices fall,” Simon Williams, chief economist for central and eastern Europe, the Middle East and North Africa at HSBC Holdings Plc, said in e-mailed comments. “Cuts are coming -- the budget deficit is too large to ignore and pretend it’s business as usual.”



Payment delays could slow the completion of projects under construction, including the $22 billion Riyadh metro, and curb the expansion needed to create jobs for a rising population. In the past, government spending has been a catalyst for growth. For example, when authorities announced $130 billion in social spending in 2011, the economy expanded 10 percent. This year, growth will probably be about 3 percent, according to data compiled by Bloomberg.

The bigger picture here revolves around the extent to which the House of Saud may be in terminal decline.

We've long said that if it should ever get to the point where Riyadh's self-inflicted wounds from manipulating crude lower end up triggering belt tightening that affects everyday citizens, the Saudis could end up experiencing an Arab Spring-type episode. Throw in the fact that Tehran looks hell bent on using the war in Syria as a kind of springboard for a regional power grab and you have the recipe for a major shift in Mid-East dynamics.

Then again, all of the above is probably completely misguided because the "very serious" people apparently think Riyadh has everyone right where it wants them. Via Morgan Stanley:

Saudi Arabia are unlikely to support an OPEC cut in production, as the oil strategy appears to be working.

Facing Dire Financial Straits, Saudi Arabia Delays Contractor Payments To Preserve Cash | Zero Hedge

 

[mustafa erkan]

Again prophaganda news.
Is this press tv a comedy chanel?

 

[SBD-3]

The Iranian's are far more diversified economy whereas Saudi is a oil addict through and through. If Saudi oil stopped pumping it would starve to death unless they can genetically modify crops to grow in sterile desert. On the other hand Iran's economy would also take a hit but it still would survive. That is not too a small differance.

Well that's interesting. An economy where even food is rationed by state....Take Iranian oil out of equation they'll be left with hezb,hamas,Huaties and Shia Malitias as their biggest export like Saudis.

I never said Saudia would go bankrupt anytime soon. Fact is any income trough can easily be handled with cut in spending and reliance on ample reserves and in the extreme bridging loans. Then when inevitably oil price rises the reserves are nourished and or loans paid off. So yes the "bankruptcy" claim is just leveraged on the hostility between Iran/Saudia and should not be treated too seriously.

I even feel (read some articles) that it is possible Saudia has increased oil production at US request to hurt Putin who was getting too cocky on back of healthy oil surplus. The increased Saudi production is hurting Russia bad style as Saudi can produce oil cheaper than Russia.

Russian oil has too high production cost, the state owned companies have no other option to increase output to meet the variable costs because if they close the workers find no other job, leads to political troubles.
Cost of Oil Production by Country - knoema.com