Saudi Arabia Cuts Spending, Slows Payments, Hits Spain Inc….”Suicide Economics”
Ugly for Spain’s over-indebted, liquidity-challenged construction giants.
by Don Quijones
WolfStreet.com
October 20, 2015
It’s almost a whole year since the House of Saud shocked the world by announcing its scheme to let market forces determine oil prices. It then did the unthinkable: it cranked up oil production. What followed was arguably the biggest price war of this fledgling century, as the price of oil fell by more than 50% in six months.
Suicide Economics
For struggling energy consumer nations, the collapse of the oil price has been a godsend; for producer nations, it has been a source of incalculable economic pain and misery. When the Saudis had their all-in moment, it was widely assumed that Russia, as well as a host of other unsavory oil-dependent “regimes” (such as Venezuela), would be first to buckle.
Eleven months on, Venezuela’s economic edifice is in tatters, Russia has lost billions of dollars in crude revenues, and the U.S. shale industry – broadly assumed to be the Saudis’ second target – is being kept alive only by increasingly difficult-to-come-by and expensive infusions of debt.
Yet despite all the balance sheet carnage, the Saudis have not won their oil price war. Not yet. Indeed, as prices continue to bite, it is the Saudi economy that is beginning to feel the pain, especially with an aggregate deficit for 2015 to 2017 forecast to exceed $300 billion.
The Rest…HERE
