By Micah Halpern
I've Been Thinking:
We live in a strange world.
Word is that Saudi Arabia is applying for an $8 billion loan from international banks.
We all know that the price of oil has dropped over the past 18 months - dropped by 60% to 70%. But Saudi Arabia is still making money - a lot of money, just not the amount their economic forecasters had projected and budgeted for.
Consider that over the past decade the Saudis have amassed $600 billion in surplus. But last year they ran a $100 billion deficit.
Now they need to make up the deficit.
Saudi Arabia has already started selling domestic bonds, but that will not be enough. Once they get their $8 billion loan, they will start selling international bonds which will allow people to invest in their national energy (oil and gas) resources.
There are also rumors that Saudi Arabia may sell off Aramco, which is the Saudi Arabia oil company, or parts of Aramco. It is their greatest national asset. Perhaps they will sell off part of the company, perhaps they will sell bonds in the company. It is, however, more likely that the Saudis will take Aramco profits and invest them aggressively.
Oil is now hovering between $38 and $40 per barrel. The situation is far improved today than it was over end of January and the entire month of February. The price of oil is slowly creeping up. But Saudi Arabia needs the cash now.
This crisis has taken a big chunk out of Saudi power and Saudi influence. It is the wrong time for Saudi Arabia to feel the pinch of a reduced cash flow. A reduced cash flow will result in a reduced Saudi influence and imprint - not what the world needs right now as Iran and Russia are increasing their respective roles.
Micah@MicahHalpern.com
Read my latest book THUGS. It's easy. Just click. http://www.amazon.com/s/ref=nb_ss_gw?url=search-alias%3Daps&field-keywords=halpern%2C+micah
To reprint my essays contact sales (at) www.featurewell.com
No comments:
Post a Comment