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Saudi Arabia struggling with low oil prices


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Skywalker

Saudi Arabia's budget deficit soared to $98bn (£65.7bn) this year as the world's biggest oil exporter counted the cost of falling crude prices.


In the first budget under King Salman, the kingdom said revenues reached 608bn riyals (£108.7bn; $162bn), down 15% on official expectations.


Spending for the year hit 975bn riyals, some 13% more than forecast.


To help make up the shortfall, the country's finance ministry said it would cut subsidies for fuel.


Petrol prices could in some cases increase by as much as 50%, authorities said, although they will remain low by international standards.


Diesel, electricity and water prices will also increase.


King Salman said the budget came "in light of the decrease in oil prices, the economic and regional and international financial challenges - where global economic growth has declined from its previous level - and the lack of stability in some of the neighbouring states."



Oil revenue

Oil prices have plunged from a five-year high of $125 a barrel in March 2012 to just $37.18 now.


Saudi Arabia said that oil revenues, which make up 77% of the total revenue figure for 2015, are down 23% compared to last year.


http://www.bbc.com/news/business-35188807


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I've been saying for 10 or 15 years that in 100 years the arabs will all be back riding camels in the desert. The oil bubble, that they created by controlling oil output, would burst and all the money they were spending would dry up. Now, with fracking increasing the supply, they've been forced to increase production to support their expensive standard of living. So maybe it will only take 20 or 30 years...

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the.lone.gunman

Factoid: the Saudis need $100 usd per barrel of oil to balance their national budget.

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cvgtpc1

Let's get this election going before someone in our govt says we should make up their shortfall to support stability in the region.

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softail

I guess that is what happens when you put all your eggs in one basket.

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What a shame! - I'm shattered that such a wonderful country should be feeling a financial pinch, in view of all the good they do in the world.

Edited by Oz Jon
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Funny how the US and Canadian frackers came in basically overnight and derailed the monopoly the powerful Opec boys had had for decades. 

 

If only the western politicians could utilize their newly found leverage and bring the oil-rich countries to their knees. 


What a shame! - I'm shattered that such a wonderful country should be feeling a financial pinch, in view of all the good they do in the world.

Without the fuel subsidies,  maybe some of the general public will begin to protest against their gov't,  something unheard of when everyone is fat,  dumb,  and happy. 

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Monsoon

"Struggling"

 

That's like when OJ Simpson cried he was 'broke' while he played golf every day in Florida.

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woodchopper

i see this morning a phenominal amount of "extra" oil will result if and when Iranian oil gets back into the market!

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Dafey

 

 

Petrol prices could in some cases increase by as much as 50%, authorities said, although they will remain low by international standards.

 

How do they figure they can raise prices to make up the deficit? They are not well schooled in supply and demand. Funny how things are different when your supply is not in demand anymore! They will have to drop the price of oil and offer a glut on the market to make up the difference. Now is the time for governments to stockpile so they don't end up in the OPEC strangle hold again.

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Headshot

How do they figure they can raise prices to make up the deficit? They are not well schooled in supply and demand.

 

I take it you don't remember the 1973 OPEC oil crisis. If OPEC works together, then supply and demand don't count as much. The US needs to put a duty on OPEC oil to protect oil interests in the US and Canada anyway. This whole downturn in world oil prices has been designed to squash the new oil shale and tar sands ventures in North America. We need to make North America energy independent, so it doesn't matter what OPEC does. OPEC does NOT act in our interests, so every action the US and Canada take should be to protect their interests rather than protecting OPEC interests.

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Dafey

 

 

I take it you don't remember the 1973 OPEC oil crisis.

 

Hi Headshot, I actually remember it well. However today we are in a different situation. The US has about a 30 year supply of oil in reserve that they just started releasing which has driven prices in the US down. This has also affected the US economy in a positive way as we've seen the Peso worth less to the dollar. Unfortunately this does not help other countries. Since the US is the leading buyer of OPEC oil it will affect them. Hopefully break their back.

 

Also, with the drive toward other sustainable energy sources, the US is banking on hybrid cars and solar energy as a other sources. In the US the Hybrid has become a more than common sight and we are seeing solar farms springing up all over. Been a long time coming.

 

And I agree totally with outgrowing our independence on OPEC. They are not even nice to their own people...why should we expect them to care about us! 

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Kahuna

 I was under the impression that it was OPEC itself that set the low oil prices in order to derail the fracking,explorations and other means of oil acquisition.It's always been an artificially inflated or deflated market depending on what prices they set on it and the myths of how it was running out kept us all paying more at the pumps. If they raise it again we go full bore back into our homegrown oil.  It was a trap they caught themselves in. :twocents:

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I didn't think I would ever see those three words in the same sentence. Saudi Arabia suffering. Good. Maybe they will stop before buying that 18th Mercedes. Or, maybe they won't order their next Gulfstream with all gold plated toilet seats and such. 

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