8 ms·

This seems unlikely to me, given the low extraction costs they have for oil. I guess the biggest danger they would face is if they have to stop "paying off" th

by drcode 6y ago

This seems unlikely to me, given the low extraction costs they have for oil. I guess the biggest danger they would face is if they have to stop "paying off" their population, and this leads to an "arab spring" type of situation. But it seems even in that case they would unfortunately have the will and resources to use Syria-style brutal tactics to contain any uprising.

toomuchtodo 6y ago
Saudi Arabia’s extraction costs are about $3/barrel, their nation state budget require $80/barrel to break even. They are burning through reserves at these market prices. Edit: To your point, it’s going to get ugly locally if market conditions persist.
- unexpected 6y ago
  Saudi makes up shit when they say their extraction costs are $3/barrel. A lot of clever accounting in that one. Actual extraction costs are roughly $10-$15/barrel.
  - boringg 6y ago
    Still far cheaper then almost everywhere else. $3 or $15
  - chki 6y ago
    Why do they or why would they make up extraction costs? (Genuinely interested)
    - exhilaration 6y ago
      Posturing. They want to intimidate producers (and their investors) that have much higher extraction costs, like U.S. frackers and Canadian oil sands firms. "We can bring oil to $10/barrel and still be profitable," you can imagine them saying threateningly.
    - deleted 6y ago
      [deleted]
    - unexpected 6y ago
      exactly what exhilaration says below! I work in the oil and gas business. U.S. independent oil companies are survivors. If I have to pick between the U.S. shale producer or Saudi kingdrom, I'll pick the U.S. shale producer every time.
    - xchaotic 6y ago
      To have an upper hand in negotiation. Everyone knows Saudi can win the war of attrition with oil at low prices they just don’t know by how much.
fmajid 6y ago
The limited success of their war on Yemen, despite having the 3rd largest military budget in the world, says otherwise.
- onlyrealcuzzo 6y ago
  So you're saying KSA has a higher military budget than 1) The US, 2) China, or 3) Russia?
  - pixl97 6y ago
    1 No. 2 No. 3 Yes. The KSA spends 8.8% of its GDP on military expenditure. Seemingly the largest of any country. https://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures https://en.wikipedia.org/wiki/List_of_countries_by_military_...
    - TheOtherHobbes 6y ago
      But KSA has no ambitions towards becoming a global military superpower. For a long time it had a choke point on the economy through its resource monopoly. Until recently that was a much more potent weapon than any number of aircraft carriers. Russia does have superpower ambitions, which is a rather more expensive business. My cynical suspicion is that much of the KSA military budget is really just a form of kickback - or possibly protection money, depending how you look at it - to the US mil-ind establishment. While the Saudis are some of the worst people in the world, their ambitions are limited to keeping the ruling dynasty outrageously rich and maintaining power on their own patch of turf. The Russian establishment is far more dangerous. It not only has links to organised crime, it also has a complement of nukes, bio, and chem weapons. And it has a very developed infowar, hacking, and social destabilisation arm, based on techniques pioneered by the US, with some home-grown twists to increase effectiveness. This oil war and related COVID crash are going to do huge damage to the economies of both countries - and a lot of others besides - with increased prospects for instability everywhere.
      - hermitdev 6y ago

by drcode 6y ago

toomuchtodo 6y ago

Saudi Arabia’s extraction costs are about $3/barrel, their nation state budget require $80/barrel to break even. They are burning through reserves at these market prices. Edit: To your point, it’s going to get ugly locally if market conditions persist.

unexpected 6y ago
Saudi makes up shit when they say their extraction costs are $3/barrel. A lot of clever accounting in that one. Actual extraction costs are roughly $10-$15/barrel.
- boringg 6y ago
  Still far cheaper then almost everywhere else. $3 or $15
- chki 6y ago
  Why do they or why would they make up extraction costs? (Genuinely interested)
  - exhilaration 6y ago
    Posturing. They want to intimidate producers (and their investors) that have much higher extraction costs, like U.S. frackers and Canadian oil sands firms. "We can bring oil to $10/barrel and still be profitable," you can imagine them saying threateningly.
  - deleted 6y ago
    [deleted]
  - unexpected 6y ago
    exactly what exhilaration says below! I work in the oil and gas business. U.S. independent oil companies are survivors. If I have to pick between the U.S. shale producer or Saudi kingdrom, I'll pick the U.S. shale producer every time.
  - xchaotic 6y ago
    To have an upper hand in negotiation. Everyone knows Saudi can win the war of attrition with oil at low prices they just don’t know by how much.

fmajid 6y ago

The limited success of their war on Yemen, despite having the 3rd largest military budget in the world, says otherwise.

onlyrealcuzzo 6y ago
So you're saying KSA has a higher military budget than 1) The US, 2) China, or 3) Russia?
- pixl97 6y ago
  1 No. 2 No. 3 Yes. The KSA spends 8.8% of its GDP on military expenditure. Seemingly the largest of any country. https://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures https://en.wikipedia.org/wiki/List_of_countries_by_military_...
  - TheOtherHobbes 6y ago
    But KSA has no ambitions towards becoming a global military superpower. For a long time it had a choke point on the economy through its resource monopoly. Until recently that was a much more potent weapon than any number of aircraft carriers. Russia does have superpower ambitions, which is a rather more expensive business. My cynical suspicion is that much of the KSA military budget is really just a form of kickback - or possibly protection money, depending how you look at it - to the US mil-ind establishment. While the Saudis are some of the worst people in the world, their ambitions are limited to keeping the ruling dynasty outrageously rich and maintaining power on their own patch of turf. The Russian establishment is far more dangerous. It not only has links to organised crime, it also has a complement of nukes, bio, and chem weapons. And it has a very developed infowar, hacking, and social destabilisation arm, based on techniques pioneered by the US, with some home-grown twists to increase effectiveness. This oil war and related COVID crash are going to do huge damage to the economies of both countries - and a lot of others besides - with increased prospects for instability everywhere.
    - hermitdev 6y ago