Breakingviews

Oil price floor could be a long way down

By Edward Hadas
January 13, 2015

Petro-economics are painfully simple for producers. Lower prices hardly push up demand. And it will take a price below $30 a barrel before supply falls enough to balance the market. Unless producers can regroup into an effective cartel, their suffering will continue.

Jumbo $6 bln bank IPO shows Saudi too big to miss

October 7, 2014

The sale of shares in the kingdom’s top bank will be the largest this year after Alibaba. A few foreign investors may share some of the upside. For most, it’s a reminder of the opportunities on offer when the $584 bln market opens more fully to outsiders next year.

Iraq troubles are unlikely to bring new oil crisis

June 24, 2014

The continued violence looks like a harbinger of a sharp cutback from one of the world’s major oil producers. But the bulk of Iraq’s production is still secure. The Middle East is clearly becoming less stable, but it would take a cascade of problems to create a big price shock.

Crude reasons support Saudi stocks

March 20, 2012

Foreign investors are sweet on Saudi. Growing excitement over a mooted easing of ownership restrictions led overseas buyers to make record net purchases in the $400 bln stock market last month. But in a market known to disappoint, it’s worth paying close attention to the risks.

Saudi words won’t ease pressure on U.S. fuel prices

March 21, 2012

Despite its reassurances, Saudi Arabia has imperfect options to prevent U.S. fuel prices from reaching risky levels seven months before the presidential elections. Sanctions on Iran, meanwhile, allow Riyadh to benefit from both strong oil prices and high production.

Saudis wouldn’t gain much from a union with Bahrain

May 2, 2012

The house of Saud’s call for Gulf states to move beyond cooperation and combine into a single entity lays the ground for forming a union with the troubled island. Yet Saudi already bankrolls Bahrain and underwrites its security. The benefits of further integration are dubious.

Saudi’s foreign aid bill piles up

May 28, 2012

Egypt, Jordan, Bahrain, Oman and Yemen: the Arab Spring has increased the kingdom’s spending to prevent unrest and boost influence. At the current oil price, the Saudis can easily afford to be generous, but today’s emergency gifts could become tomorrow’s permanent liabilities.

OPEC starting to look like a cartel of one

June 14, 2012

Twelve nations belong to the oil export club, but of late only Saudi Arabia has mattered. At the latest meeting, the kingdom again batted away Venezuela, Iran and others who wanted to cut output. The deepening divide in OPEC could face a more serious test if prices keep sliding.

Saudi Arabia pushes accelerator on reform

July 9, 2012

The House of Saud is moving at last on economic reform, even without the crunch of lower oil prices. It is trying to address the country’s chronic unemployment and housing problems, in a bid to shore up stability. These first steps are still tentative, but the direction is clear.

Saudi $4 bln lifeline to Egypt won’t come for free

May 23, 2011

Autocratic governments can act faster than multi-lateral financial institutions. Saudi Arabia's $4 billion lifeline to Egypt comes just as the country is still discussing an aid package with the International Monetary Fund and the World Bank.