Oil price needed by Saudi Arabia to balance budget

[c1ue]

This is interesting - the oil price needed by Saudi Arabia in order to balance its budget:

http://rogerpielkejr.blogspot.com/20...ice-floor.html

The FT has an important but quiet article on a recent report by the IIF:

Saudi Arabia could need the oil price to average more than $100 a barrel by 2015 to sustain the big public spending rises it plans in an effort to forestall the political unrest sweeping the Middle East.

The oil market is growing increasingly worried about Riyadh’s fiscal needs as it fears that they could force Saudi Arabia to pursue oil policies similar to those of Venezuela and Iran, traditionally the price hawks at the Opec oil cartel.

The break-even oil price the Gulf kingdom requires to balance its budget will jump from $68 last year to $88 this and then $110 in 2015, according to new estimates by the Institute of International Finance, a leading industry group.

There you have it: a direct link between oppression of Middle East populations and oil import costs for the West.

[peakishmael]

Re: Oil price needed by Saudi Arabia to balance budget

There you have it: a direct link between oppression of Middle East populations and oil import costs for the West.

I am not disputing the oppressiveness of the Saudi state, but it seems that even if SA was a liberal democracy, they would still need an increasing oil price to offset the effects of population growth, inflation and the demands of their citizens.

Regardless, if all they need is $88/barrel this year to balance, and $110/barrel by 2015, they shouldn't have to "pursue oil policies similar to those of Venezuela and Iran", since oil is $110/barrel already. Did the FT not notice this???

[c1ue]

Re: Oil price needed by Saudi Arabia to balance budget

Regardless, if all they need is $88/barrel this year to balance, and $110/barrel by 2015, they shouldn't have to "pursue oil policies similar to those of Venezuela and Iran", since oil is $110/barrel already. Did the FT not notice this???

What FT was trying to say was that the massive subsidies of Venezuela and Iran - in the form of both extremely cheap gasoline as well as direct payments of food or cash - lead into a need for high oil prices. This was specifically directed at the $37 billion recently promised by the government of Saudi Arabia.

As for present vs. future prices - the correct conclusion to be drawn is that we aren't going to be seeing $3 gasoline very soon.

The actual correct conclusion to be drawn is that dollars are growing less and less useful as a measure of value.