Yes the oil industry is going to take years to recover from 2020.
Saudi stocks slump as minister warns of ‘painful’ measures ahead
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Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#12Can the Saudi government survive a reduction in services? Their economy is largely built around the distribution of oil sale proceeds, I’m worried that cutting benefits might destabilize that regime.
Venezuela and Syria have survived much worse with fewer resources. There will definately be enough money for the police and military.
Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#13Looks like Saudi regime is in big trouble. They won't be able to balance their budget with oil prices so low and they won't be able to make payments to thousands of their princes. I did some searching and found few interesting data points: > For dozens of oil producers, the plunge in oil prices is devastating. No major oil producer can balance its budget at prices below $40; according to the International Monetary Fu…
Though Saudi has been aware of its dependancy upon oil and beena primary driver in much investment, though when much of that investment has been in other companies - then for them it is a double hit.
Unsure how advanced along their migration away from oil money is over alternatives, but will be further along than other oil dependant countries.
Though this will help focus many more minds away from oil, so that is not a bad thing at the end of all this.
Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#14Can the Saudi government survive a reduction in services? Their economy is largely built around the distribution of oil sale proceeds, I’m worried that cutting benefits might destabilize that regime.
Venezuela and Syria have survived much worse with fewer resources. There will definately be enough money for the police and military.
Those countries are not surviving. They are failed states.
Edit: So too will be Saudi Arabia; they waited too long to take meaningful action to diversify away from oil revenue. Norway is the model for how to avoid the resource curse.
Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#15Earlier quoted context omitted.
That's what the US troops are there for. The US needs the Saudi dictators to maintain their influence in the region.
Needed, past tense. US foreign policy used to be shaped around our need for Saudi oil, and IMO hasn’t properly adjusted to the fact that America is energy independent again. The realpolitik question now isn’t “how can I secure Saudi oil” But rather “what’s the least I can do to reduce any risk of terrorism”.
FWIW, I would not underestimate the degree to which foreign powers that are, otherwise, irrelevant to US interests can capture parts of the US political system. It is an unfortunate fact that political influence is not all that expensive to purchase.
Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#16Earlier quoted context omitted.
That's what the US troops are there for. The US needs the Saudi dictators to maintain their influence in the region.
Needed, past tense. US foreign policy used to be shaped around our need for Saudi oil, and IMO hasn’t properly adjusted to the fact that America is energy independent again. The realpolitik question now isn’t “how can I secure Saudi oil” But rather “what’s the least I can do to reduce any risk of terrorism”.
The US "was" energy independent. But now all the US oil drillers are shutting down. The same factors hurting Saudi are hurting oil in the US.
Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#17Yes the oil industry is going to take years to recover from 2020.
Maybe not as it's a supply and demand market, supply outstrips demand so more costly extraction shuts down (shale being one of them), you then see price rise as less supply and always some demand as they always balance out and then, you see other sources viable to extract - rinse repeat.
SO to recover to the same level of usage - I kinda hope it doesn't and we see a gradual reduction once things back to the new normal. But shall see. Problem is as it gets cheaper due to surplus - other uses become viable like generating electric as cheaper per KW than buying from the grid or other sources. Things like that, so the nuances of all this are all down to how we define normal after this lockdown. Either way, the industry will carry on, just price accordingly.
Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#18The other comments are talking about oil, but because of COVID-19, Hajj and Umrah are not taking place this year.
The Hajj and the Umrah add around $12 billion per year to KSA's GDP (7% of the GDP).
The closing of the Haramayn (the Mosques of Makkah and Madina) crippled internal tourism which amounts to lots of money.
Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#19The image caption used in this article, and in many similar pieces, is honestly somewhat scary:
> Why Now Is the Time to Be Buying Big Oil Stocks
This is dangerous advice given most investors, never mind casual investors, don't understand how the oil market works. Last I checked, there is no convenient way to invest in the spot price of oil eventually going up. People who buy "oil ETFs" like USO hoping to cash out if the price rises later don't understand how the underlying asset works, and end up losing a lot of money [1].
Using captions like that is simply irresponsible and should be avoided.
[1] https://www.cnbc.com/2020/04/21/retail-investors-who-believe...
Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead
#20Can the Saudi government survive a reduction in services? Their economy is largely built around the distribution of oil sale proceeds, I’m worried that cutting benefits might destabilize that regime.
Ya, and they were diversifying into tourism which is also bust. I’m sure they’ll survive though. Their wealth is in the trillions.
Saudis aren’t exactly known for their adherence to austerity.