How the Saudis are coping with lower oil prices and revenues- cutting gasoline subsidies and other spending to reduce budget deficits in 2016

12/28/2015

Gasoline prices for some grades of gasoline sold in Saudi gas stations will increase by 50% as the Saudi Finance Ministry copes with dropping oil revenues. The 2016 budget shows adeficit of $87 billion compared to $98 billion in 2015. At this rate Saudi Arabia would exhaust its foreign exchange reserves of $640 billion by 2020. Saudi Arabia has a rapidly growing population which will increase budget pressures and local oil demand. Its defense spending to counter Iran and Russia in the Syria-Iraq conflict and in Yemen also affect spending. Lower oil prices are partly a result of the geopolitical conflict in the region and rivalry betweeen Iran backed by Russia and Sunnis led by the Saudi and Emirates, as well as technology in shale oil production. This comes at a good time for China as it slows, India as it increases its growth rate, and the U.S. and Eurozone as their economies recover from a deep recession, Japan as it improves its economy from low or no growth. For Russia it is seen as away to shift away from imports to domestic industry. For the Saudis an opportuntiy to cut subsidies and improve the productivity of spending.

Grouped Articles

Saudi Arabia, Squeezed by Low Oil Prices, Cuts Spending to Shrink Deficit

New York Times 12/28/2015

Rick Gladstone, Rick, Gladstone

Oil Prices at $30 Bend Nations, But Which Ones Could Break?

Wall Street Journal 01/13/2016

Spencer Jakab, Spencer, Jakab

Saudi Arabia Keeps Pumping Oil, Despite Financial and Political Risks

New York Times 01/27/2016

Stanley Reed, Stanley, Reed

Oil-Price Poker: Why the Saudis Won’t Fold ‘Em

Wall Street Journal 02/01/2016

Spencer Jakab, Spencer, Jakab

Young Saudis See Cushy Jobs Vanish Along With Nation’s Oil Wealth

New York Times 02/16/2016

Ben Hubbard, Ben, Hubbard

Weak Oil Prices Curbing Production

Wall Street Journal 04/13/2016

Bill Spindle, Bill, Spindle

Saudi oil production policy in 2016, and the prospect of low oil prices for the long term

01/27/2016

With Iran expected to add its production to supplies following lifting of sanctions in 2016, the Saudis would lose market share if they cut production. The Saudis are also on opposite sides with Iran and the Shiite government in Iraq, in the Middle East conflict. Russia is also on the opposite side of this conflict. As a result the Saudis are likely to stick to policy of full production with no cutbacks for the long term. When the Saudis made the policy decision at OPEC meetings in 2014 to not cut back on production as prices declined, it may have been done with the idea of revising policy later on. In 2016 with added Iranian production, this flexibility is diminished. Russia's bombing campaign in Syria, and its ability to withstand sanctions and low oil prices because of a declining ruble, and the cutoff in diplomatic relations between Iran and Saudi Arabia, have put all sides in an economic war of attrition. The Saudis with $630 billion in reserves also see the ability to withstand low oil prices for the long term. Low oil prices help boost economies in the U.S, European Union, Japan, India, China, Turkey, and other countries as the global economy slows down in 2016.

Grouped Articles

Saudi Arabia Keeps Pumping Oil, Despite Financial and Political Risks

New York Times 01/27/2016

Stanley Reed, Stanley, Reed

Oil-Price Poker: Why the Saudis Won’t Fold ‘Em

Wall Street Journal 02/01/2016

Spencer Jakab, Spencer, Jakab

Oil Output Freeze Is an Agreement With a Catch

New York Times 02/16/2016

Andrew E. Kramer, Andrew, E., Kramer, Stanley Reed, Stanley, Reed

Young Saudis See Cushy Jobs Vanish Along With Nation’s Oil Wealth

New York Times 02/16/2016

Ben Hubbard, Ben, Hubbard

Weak Oil Prices Curbing Production

Wall Street Journal 04/13/2016

Bill Spindle, Bill, Spindle

How OPEC lost control of the oil market - The Washington Post

Washington Post 04/15/2016

Steven Mufson, Steven, Mufson

King Salman of Saudi Arabia 2015-

01/23/2015

Grouped Articles

New Saudi King and U.S. Face Crucial Point in the Relationship

New York Times 01/23/2015

Helene Cooper, Helene, Cooper, Rod Nordland, Rod, Nordland, Neil Macfarquhar, Neil, Macfarquhar

Saudi Arabia’s Succession Line Is Set, but the Nation’s Path Remains Uncertain

New York Times 01/23/2015

Ben Hubbard, Ben, Hubbard

Obama’s visit to new Saudi king highlights the kingdom’s importance to the U.S. - The Washington Post

Washington Post 01/24/2015

Steven Mufson, Steven, Mufson

Saudi ruler is buried as new King Salman moves younger generation closer to throne - The Washington Post

Washington Post 01/24/2015

Kevin Sullivan, Kevin, Sullivan

Saudis Aim to Project Stability

Wall Street Journal 01/26/2015

Ahmed Al Omran, Ahmed, Al, Omran, Felicia Schwartz, Felicia, Schwartz

A Smooth Saudi Succession, but a Rough Road Ahead

Wall Street Journal 01/26/2015

Karen Elliott House, Karen, Elliott, House

The effect of sharp oil price declines in 2015 on Saudi Aramco

02/20/2015

Saudi Aramco is seeking price cuts from suppliers as it faces a sharp decline in oil prices.

Grouped Articles

Oil-Drop Pain Spreads to Saudi Arabia’s Energy Behemoth

Wall Street Journal 02/20/2015

Summer Said And Benoit Faucon, Summer, Said, And, Benoit, Faucon

As Saudis Keep Pumping, Thirst for Domestic Oil Swells

Wall Street Journal 07/04/2015

Summer Said And Ahmed Al Omran, Summer, Said, And, Ahmed, Al, Omran

U.S. Oil Prices Hit Fresh Six-Year Low, Dipping Below $40 a Barrel

Wall Street Journal 08/23/2015

Nicole Friedman, Nicole, Friedman

From Venezuela to Iraq to Russia, Oil Price Drops Raise Fears of Unrest

New York Times 08/24/2015

Clifford Krauss, Clifford, Krauss, Rick Gladstone, Rick, Gladstone

OPEC’s Oil Output Strategy Seen Potentially Backfiring

Wall Street Journal 11/10/2015

Sarah Kent And Benoit Faucon, Sarah, Kent, And, Benoit, Faucon

Saudi Arabia, Squeezed by Low Oil Prices, Cuts Spending to Shrink Deficit

New York Times 12/28/2015

Rick Gladstone, Rick, Gladstone