Oil Price Drop: Who Will Feel the Pinch?

21st Century Wire says…
For the second straight year running, we are seeing a drop in oil prices and this translates to savings at the pump with many US states now enjoying prices below $2.00 per gallon. It’s also good for small to medium size businesses and translates into lower food prices (lower cost of transportation).
It also means that Fracking shale industry is no longer viable economically – which is good news if you are a fan of clean ground water.
The Saudis have spent around $100 billion of foreign reserves to keep shale and other low-cost oil producers out of business. Their decision in 2014 not to cut production has driven prices well below $50 a barrel. However, this is not good news for countries who are overly dependent on oil to support their entire economy. One such country currently in trouble financially is Saudi Arabia, who are now in debt and have no cash reserves left – for the first time in their history.

Saudi 2016 growth to dive as debt rises, reserves drop: report

Saudi economic growth is set to slow further in 2016 after the OPEC heavyweight announced record deficits due to a slump in oil prices, an economic report said Wednesday. Jadwa Investment forecast the Saudi economy would grow by just 1.9 percent next year, down from 3.3 percent this year and 3.5 percent in 2014. To…

Yahoo News

This also exposes the Saudi royal family additional risk of domestic social and sectarian instability at home.

Saudi royal calls for regime change in Riyadh

Plea by grandson of state’s founder comes as falling oil prices, war in Yemen and loss of faith in authority buffet leadership of King Salman

the Guardian

Will too much debt cause petrol kingdom to lose its ability to project power internationally? Not necessarily, just look at the US who are $17 trillion in the hole, and still bullying the world. Russia is also dependent on healthy oil and gas prices in order to remain strong, and there are some pundits who believe that OPEC’s choice to keep prices down is a form of ‘economic warfare’ in a US-led effort to bankrupt Russia.

Russia Is Not Sure Oil Price Is a US-Saudi Conspiracy

This is an excerpt from an article that originally appeared at CounterPunch“Saudi oil policy… has been subject to a great deal of wild and inaccurate conjecture in recent weeks. We do not seek to politicize oil… For us it’s a question of supply and demand, it’s purely business.”– Ali al Naimi, Saudi Oil Minister

russia-insider.com

Time will tell who the winners and losers are, but one thing is certain in 2016 – someone is going to feel the pinch somewhere.

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