-
Tips for becoming a good boxer - November 6, 2020
-
7 expert tips for making your hens night a memorable one - November 6, 2020
-
5 reasons to host your Christmas party on a cruise boat - November 6, 2020
-
What to do when you’re charged with a crime - November 6, 2020
-
Should you get one or multiple dogs? Here’s all you need to know - November 3, 2020
-
A Guide: How to Build Your Very Own Magic Mirror - February 14, 2019
-
Our Top Inspirational Baseball Stars - November 24, 2018
-
Five Tech Tools That Will Help You Turn Your Blog into a Business - November 24, 2018
-
How to Indulge on Vacation without Expanding Your Waist - November 9, 2018
-
5 Strategies for Businesses to Appeal to Today’s Increasingly Mobile-Crazed Customers - November 9, 2018
Saudi Arabian Oil Production and Demand Increase
Canada’s energy sector has no control over the price of oil, but it does have control of its spending and that is where the pain will come in the fall.
Advertisement
Don’t be seduced by today’s rally in oil markets. Consequently, whether one likes it or not, oil continues to be priced in dollars.
It took top spot in April this year and even before that was behind only the United Sates. Flights of fancy maybe but at some stage someone will blink and current problems in China may be a precursor to action from Opec, an unholy alliance maybe but stranger things have happened…
And there are also implications for worldwide investment in Gulf property – developers say that Chinese interest in buying property in Dubai has increased considerably as trade links between the two countries grow.
But if growth is likely to accelerate next year in oil-consuming economies such as China, what explains plunging oil prices?
There was actual solid math behind the claims in the 1970s and ’80s that the world would run out of oil. There are plenty of them around, notably the eurozone.
Such measures look set to be complemented by cutbacks in capital expenditures, which account for roughly one-third of total Saudi government spending.
The fall of oil and natural gas prices is a boon to U.S. consumers and the economy.
So, as they watch China twist in the wind, they are acting cautiously on oil prices, aware that a sharp increase in prices would damage confidence and might tip the world into a downturn whose consequences would damage them as much as the West. Noting the “twin fiscal shocks” of lower oil prices and increased spending, the rating agency forecast that the (Saudi) budget deficit will widen to 14.4 percent of gross domestic product this year.
Economists at Deutsche Bank have done a similar analysis and extended it to a few more countries. Moreover, the currency peg survived far greater levels of speculation, first during the long oil price slump of the 1990s and then again during the wild price swings in 2008.
Askari said he expects oil prices to stay between $35 and $60 a barrel for the next seven to 10 years, barring any type of event that would push prices higher.
And the kingdom’s finances are also being put under strain from the other side of the budget.
The World Bank said: “The old development model – or social contract – where the state provided free health and education, subsidized food and fuel, and jobs in the public sector, has reached its limits”.
First, it’s important to keep looking for new workers. On the contrary, with so numerous world’s most productive oil regions gripped by political chaos, any sign of stabilization can quickly boost supplies. The stock market in oil-rich Saudi Arabia lost 23 percent this month.
Saudi Arabia is under tremendous pressure.
A powerful economic mechanism underlies the inverse correlation between oil prices and global growth.
While the largest oil majors are capable of surviving on the strength of their global assets, you can expect the wave of bankruptcies to start increasing by the end of 2015. It is an expensive business and lower oil revenues will make it all the more challenging. Venezuela’s last official inflation print showed prices rose 68% year-over-year in December 2014. In fact, Saudis have downplayed the impact of lower prices on their country, asserting that the kingdom has the financial wherewithal to withstand lower oil prices. Of course a high price for oil exports would be helpful.
Advertisement
Iran is also hoping that once sanctions are lifted, it will revive investment in its oilfields by Western energy companies, analysts said.