Saudi Arabia Suffers from Oil Recession, Looking to the US for Help

Getty Images

Getty Images

When OPEC made the decision to maintain their levels of oil production, they did not expect such heavy losses themselves. Many have suspected that OPEC wanted to eliminate competition from American-based shale oil producers, and therefore, kept production high in order to lower the oil price. However, OPEC apparently did not foresee certain economic disadvantages that they would incur due to their actions.

Some countries within OPEC, specifically Saudi Arabia, have been experiencing adverse side effects because of their decision to create a glut in supply. Despite the consequences of a dropping oil price, Saudi Arabia has continued to maintain its spending habits, which has caused some issues with their budget. Their budget deficit recently reached $100 billion, and they have been forced into their foreign reserve fund.

There has been a high correlation between the drop in the price of oil and the amount of Saudi Arabian foreign assets that have been lost. This amounts to a nearly $150 billion reduction in the foreign reserve account since January 2014. Additionally, this has caused the nation to begin seeking investment from many American based companies. They also are considering putting Saudi Aramco, the nation’s oil producer, on public exchanges in the hope of raising more capital for the country.

Article written by HEI contributor Timothy McNally.

4 Comments on "Saudi Arabia Suffers from Oil Recession, Looking to the US for Help"

  1. Let them eat basbousa

  2. Are you serious!!?? This is the most contrived, short sided article. As if they didn’t realize!!?? And they want us to invest??!! Are you out of your mind??!!

  3. I’d rather see our tax money go to American shale before this silliness. And I rather see true competition even more. They’re both on their own.

  4. What a joke! | March 8, 2016 at 11:23 pm | Reply

    What a joke! The Saudis need to take Economics 101. You only spend what you have. What about all the high oil prices dictated by OPEC? Anyone with a brain could have figured out that flooding the market would bring prices down? They made their own bed, let them lie in it!

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