Wednesday, June 21, 2017

What is the Saudis' deal?

Is Saudi Arabia still projected to run out of money in the next few years? A year or two ago, when it became clear that low oil prices was the new normal, there were all these articles noting that because KSA needed oil to be at least $106/barrel to balance its budget it was spending down its cash reserves at a furious pace and was projected to run out before 2021. Oil is currently trading below $43/barrel, and yet Saudi Arabia is still acting like a dickish economic superpower.

Either something has changed (and if so, what changed?) or the Saudis are living on borrowed time and they know it. So why such a brash foreign policy? Are they just putting themselves in as strong a position possible before their inevitable crash? Or are they just living in denial and/or betting there will be a new surge in oil prices?