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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

#81

Post by ashtonkem »

MR4D wrote: post #71
gaukes wrote: post #5

Earlier quoted context omitted.

Ya, and they were diversifying into tourism which is also bust. I’m sure they’ll survive though. Their wealth is in the trillions.

Foreign reserves are only about 1/2 trillion and dropped about 5% last month. They aren’t in the best position, and the longer this goes on, the more the downside accelerates. Once people think you’ll run out soon, you’re screwed. At these prices, SA can’t just turn oil into dollars (well, not many dollars anyway). [0] - https://www.middleeastmonitor.com/20200430-saudi-foreign-res...

I imagine that foreign creditors will allow KSA to get much closer to 0 than they’d allow most other countries because KSA has a clearer path to repayment; bow out of the current oil production spat with Russia. But spending down 5% in one month is alarming.

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

#82

Post by ashtonkem »

arcticbull wrote: post #75
ashtonkem wrote: post #72

Earlier quoted context omitted.

The Canada thing is a good point, I always forget how much of our imports come from our peaceful neighbors. America continues to import KSA oil mostly because California won’t frack, which could be changed if necessary. As far as continuing to import, I believe that’s a factor of oil and refinery quality. America has some amazing refineries capable of eating garbage quality oil, including diluted tar. Since fracking…

The article about why Canada imports oil is interesting. Some of the Maritimes are cut off from pipelines, and aren't set up to refine bitumen. It's actually just cheaper to buy KSA oil than solve these problems. I wonder if this is true in the US since I was under the impression West Texas Intermediate was pretty comparable to Arab Light. I'd love to learn more about the specifics here.

IIRC many American refineries were retooled at great cost to eat both Canadian and South American oil, which is lower quality than the Arab stuff; nobody expected that fracking would suddenly produce a glut of really high quality oil.

Also, good quality oil can be used to dilute thicker oils to the point where refineries can process them. It’s my understanding that this is how you process Venezuelan oil for example. It wouldn’t surprise me to find out that American oil is being exported to blend other stuff before refining.

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

#83

Post by darkerside »

emilsedgh wrote: post #62
darkerside wrote: post #47

Earlier quoted context omitted.

What does sleeping in an open grave mean? While you were in Iran, were you involved in what the US called the Arab Spring? Was it really spread by Twitter? Did it seem like the regime might topple?

That means they find an unused grave and sleep in it [0]. Google images has some pretty disturbing pictures of the phenomena. Iran had green movement [1] which happened earlier than Arab Spring. Peaceful protesters rushed to the streets after a fraudulent election and hundreds were murdered by the regime. The other candidates have been under home arrest ever since. [0] https://en.wikipedia.org/wiki/Grave_Dwellers [1]…

You're right. I was thinking of Green Movement, not the Arab Spring. Thankss for correcting.

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

#84

Post by blaser-waffle »

Havoc wrote: post #40
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?

Broke governments can't subsidize food, water, medical care, or other services. The Arab Spring was kicked off by a local drought and rising food prices. It's easy to support a repressive monarchy when the money is flowing and you're sittin pretty while well fed, and in comfy AC.

Example: https://www.theguardian.com/lifeandstyle/2011/jul/17/bread-f...

The Arab Spring in Syria led to rebellions that spilled into Turkey and Iraq (Kurds, ISIS, Russian and US intervention, etc.).

> Even if you capture someone else's oilfields...then what? Produce oil there at a loss too?

They're not after oil fields per se, but changes in control, money, and other resources. If oil is so cheap that the price is negative then it means you can fly your attack craft without worrying about fuel costs...

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

#85

Post by blaser-waffle »

kingofpandora wrote: post #74
toomuchtodo wrote: post #14

Earlier quoted context omitted.

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. https://en.wikipedia.org/wiki/Resource_curse

But Syria wasn't exactly an oil-rich country. Sure they had some oil but not game changing levels like in the Gulf. Also notable is that Syria is a "failed state" largely because of the oil money pumped into the opposition by those same Gulf States.

And political machinations by their neighbors (Israel, plus Lebannon pushing the Alawites north) and other interested parties, e.g. the US supporting anti-Assad militias, Russia backing Assad, etc.

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

#86

Post by birdyrooster »

dan-robertson wrote: post #79
birdyrooster wrote: post #76

Earlier quoted context omitted.

Hilarious that while the rest of the market was booming they were losing billions.

I think it would be silly to assume that their only incestments were in the vision fund. Those were surely expected to be high risk. It wouldn’t even be that surprising for a sophisticated investor to have some funds which lose money while the market is booming (eg even the best performing short selling funds lose money) as they may be hedging against the market no longer booming.

Ahh okay, I guess I would've expected to hear about the investments which are so successful that they are balancing out the VisionFund and negative oil margins. Let me know if you have any sources that show their foreign investments have been profitable enough to offset these losses.

To my ears they are actually in a very dangerous place in terms of runway for maintaining a civilization in the desert during catastrophic climate change.

Who would want to go there and do business with them? They are led by murderous despots with missiles pointed at them from multiple directions (Iran/Syria/Israel/Yemen). A country best known for financing the 9/11 attacks. Good grief.

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

#87

Post by nickik »

9nGQluzmnq3M wrote: post #48
nickik wrote: post #38

Earlier quoted context omitted.

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.

The history of Saudi Arabia is the history of factional infighting in the Said family. MBS is not yet King and his rise & rule have ruffled a lot of feathers. That said, the system of keeping the royal family fat and happy with lavish stipends is entirely by design.

The history of Saudi Arabia is also one of stability and much more consensus then infighting.

There are clearly more people getting payed, then strictly needed. I'm not saying it will be smooth, but they also all understand what happens to them if the Muslim Brotherhood or even AQ takes over Saudi Arabia. The US understand that also.

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

#88

Post by blaser-waffle »

pengaru wrote: post #33
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?

Indeed. Any large holding company is going to hold some, even a lot, of US stocks and assets -- theres be where the big money is. Same holds true for the Norwegian Sovereign Wealth Fund, or the Ontario Teacher's Union Pension Plan (two other large state-related investors)
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