The Haiku of Finance for 07/01/15

Saudi give-away
Charity begins at home
Cash in a niqab

The Haiku of Finance for 12/25/14

Saudi price target
Assuming oil fills budget
Despite year-long drop

The Limerick of Finance for 08/19/12

Saudi oil production is still high
Implying Peak Oil isn't nigh
There's still plenty left
OPEC has some heft
Don't worry, we're not going to die

The Haiku of Finance for 07/26/11

No Peak Oil just yetBig Saudi petro complex
Betting there's oil left

The Haiku of Finance for 06/10/11

Saudi surprises
Says it will boost production
Hit thirty-year high

Saudia Arabia's Fiscal Reality

The Saudi government is basing its fiscal budget for 2011 on a world oil price of about US$50/bbl, which is more than a third lower than the current market price of US$90/bbl.  It is now drawing on reserve funds and deficit spending to keep its multi-year US$400 billion infrastructure improvement program on track. 

Saudi Arabia is very concerned about its ability to sustain its infrastructure projects in the face of both slackening oil demand (from a possible global recession) and constrained supply (from reservoir depletion).  Despite Saudi Aramco spending $100 billion on improvements in production capacity to 12 million bbls/day, average daily output in 2009 fell by 11%.  This inability to raise production may be more a function of dwindling reserves than insufficient infrastructure.  They may be throwing good money after bad in the face of Peak Oil, much as Dubai did.