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Keeping oil prices low punishes not only Russia but Iran and Venezuela, so that could be a major reason why the Saudis are flooding the market.
by Synaesthesia 7y ago
Keeping oil prices low punishes not only Russia but Iran and Venezuela, so that could be a major reason why the Saudis are flooding the market.
- wyxuan 7y agoSaudi couldn't care less about Venezuela and Iran isn't even supposed to be in international oil markets (sanctions).
- mardifoufs 7y agoSaudi arabia still need a barrel price of 80$ to keep their budget balanced. They have also mostly eaten through their reserves and are economically 100% oil dependant. Yeah it costs them only 2-3$ to get the oil from the ground but Saudi Arabia is basically just a huge welfare state and a kleptocracy for it's ridiculous number of princes and royal family members. Russia has more flexibility imo and can cope a lot better with low oil prices, but Iran will probably see an even bigger economic collapse since they were already selling at a steep discount to offset trade sanctions. Venezuela was also selling at really low prices and couldn't even afford to keep It's oil infrastructure from collapsing at 50$/barrel so I have no idea how they will avoid total economic destruction soon. Maduro won't be able to pay off the army for long now So they are all going to be badly hurt, I don't see how saudi arabia can afford prices these low for long. They can't do like they did in the past and just drive everyone else from the market by crashing prices at will.