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Saudi stocks slump as minister warns of ‘painful’ measures ahead

bloomberg.com

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Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#31

Post by lotsofpulp »

ashtonkem wrote: post #9
101404 wrote: post #4

Earlier 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”.

> US foreign policy used to be shaped around our need for Saudi oil

US foreign policy is shaped around making sure the whole region remains in conflict. That allows for more weapons sales, cheaper oil due to infighting, and excuses to intervene and have the military there.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#32

Post by JumpCrisscross »

TempHNAcc wrote: post #18

The 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.

> The Hajj and the Umrah add around $12 billion per year to KSA's GDP

Much of that revenue is FX. That increases its value, riyal for riyal, to the fixed-rate currency Kingdom.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#33

Post by pengaru »

Bang2Bay wrote: post #8

Saudi has been investing heavily in the US stock market. At somepoint they were holding TSLA as well, despite relying on oil for their living.

> Saudi has been investing heavily in the US stock market. At somepoint they were holding TSLA as well, despite relying on oil for their living.

Is garden variety hedging and diversification really all that noteworthy?

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#34

Post by fmajid »

sjg007 wrote: post #25
ashtonkem wrote: post #9

Earlier quoted context omitted.

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”.

Well US troops are there to be a check on Iran, China and Russia. Terrorism is a rare side effect.

The presence of US troops in Saudi Arabia was a primary motivation for Bin Laden and 9/11.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#35

Post by echelon »

Etheryte wrote: post #19

The 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…

How is investing in oil majors or low-leveraged midstream a bad idea?

Not only do many of these companies have a good balance sheet, but they're 4-6X undervalued if you're long on the investment.

Furthermore, these companies are at price points where the dividend yield is 30-60%. You could put a percentage of your yearly salary in and retire on passive income when the market returns to normal.

Having a passive income stream is the ultimate way to pursue building a startup.

Oil will come back.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#36

Post by aazaa »

> The collapse in crude prices and the government’s drawdown of foreign reserves is putting more pressure on the Saudi riyal. Still, prices for 12-month dollar-riyal forward contracts are well short of their all-time high reached in 2016.

> A currency devaluation would be too costly for Saudi Arabia and the better option is to adapt to the oil shock through fiscal changes, according to Goldman Sachs Group Inc.

Like many countries in the region, the Saudi currency is currently "pegged" to the US dollar. So the devaluation being discussed means abandoning the exchange rate that's been in place since 1986.

https://en.wikipedia.org/wiki/Saudi_riyal#Fixed_exchange_rat...

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#37

Post by 101404 »

ashtonkem wrote: post #9
101404 wrote: post #4

Earlier 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”.

It's not only about the US need for Saudi oil.

It's about controlling the access to oil of friends and foes. Can't be the global hegemon without controlling that access.

And it's also about keeping oil being billed in US dollars. That's why the US can print as much money as they want (well, almost).

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#38

Post by nickik »

ashtonkem wrote: post #2

Can 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.

Regimes like this often underestimate their own stability. There are tons of useless princes and government workers that are not really in a position to revolt if they get less money.

Unless there is a serious rift in the top level elites, they can survive.

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#39

Post by m3kw9 »

Jerry2 wrote: post #7

Looks 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…

Can you explain what it means to balance the budget? Is it like break even price for the industary?

Re: Saudi stocks slump as minister warns of ‘painful’ measures ahead

#40

Post by Havoc »

Jerry2 wrote: post #7

Looks 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…

>Probably a few wars too.

Not sure how you're gonna fix this with wars given that every oil producer is underwater. Even if you capture someone else's oilfields...then what? Produce oil there at a loss too?

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