Monday, August 24, 2015

NEWS  |  DW: Saudi Arabia Hit by Low Oil Prices, Faces Difficult Decisions  |  Rigzone

NEWS  |  DW: Saudi Arabia Hit by Low Oil Prices, Faces Difficult Decisions  |  Rigzone: "Douglas-Westwood, an energy business strategy, research and commercial due diligence services provider, commented in its latest edition of DW Monday that low global crude prices have hit Saudi Arabia hard. With a considerable budget deficit, Saudi has been forced to begin borrowing from capital markets – $4 billion in July. The kingdom is highly reliant on oil – accounting for more than 90 percent of budget revenues. Cuts have not been made to capital expenditure and Saudi has engaged in an expensive conflict within Yemen. Consequently, the decision to ride out lower prices has put a huge strain on finances – the IMF (International Monetary Fund) estimates $50 oil will lead to a deficit of ~$140 billion (20 percent of GDP) this year. Plugging holes in the budget with bond issues is the clearest sign yet that the kingdom is feeling the pinch, the question is, how long can it continue?"

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