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I think both KSA and Russia eventually will come to an agreement. Current oil prices are not sustainable for KSA. Their budget deficit is already touching 7% of
by shreyshrey 7y ago
I think both KSA and Russia eventually will come to an agreement. Current oil prices are not sustainable for KSA. Their budget deficit is already touching 7% of their GDP (https://mobile.reuters.com/article/amp/idUSKBN1XA2EO https://mobile.reuters.com/article/amp/idUSKBN1XA2EO). If they need to balance their budget they need the oil price to be at 71$.
- InTheArena 7y agoDefecits don't matter, until all of a sudden the ability to sell debt is limited. While the US continues it's current policies, I don't see that in the immediate future. However, one day soon that will stop... and then people will notice that sovereign debt far outpaces any other form of non-secured credit.
- onlyrealcuzzo 7y agoI doubt anyone in their right mind views a KSA backed bond anywhere near as safe as the US. The only meaningful revenues KSA has is from Aramco, and Aramco only has 40 years of oil reserves left at current production levels. Their 30 year bonds should have very high yields.
- csomar 7y agoOr increase their market share. Saudi Arabia is among the countries who can produce oil cheaper. Under $20 the number of countries that can pump profitably is very small.