I recently read an interesting article in the Wall Street Journal. The article was titled “Oil’s Drop Puts Spotlight on Saudi Arabia.” The article provides insight about Saudi Arabia’s current role in the world of oil markets.
I found the increase in their budgetary shortfall particularly interesting. Saudi Arabia has gone from three to 20% of their domestic Gross Domestic Product. This makes one wonder how long will they produce at these levels, especially if they continue to eat into their sovereign wealth fund at such an escalating pace.
It appears they are placing a rather large bet to try and permanently take world market share. We need to continue to watch how this plays out. This will be interesting and very impactful for the Gulf Coast economy.