Saudi Arabia's Misguided Oil Strategy | E-Axes

Not a member yet? Click here.
Forgot your Password?
Archives - Categories
On Inequality
On the Eurozone Debt Crisis
On Monetary Policy and Central Banking
On Global Economic Growth
On the Greek Debt Crisis
On the Banking and Financial Sectors
On Brexit
On China
On India
On Global Inflation
On Currencies
On the US Debt
On the "Economics" of the Arab Spring
Working Papers
Books suggested by members

Saudi Arabia's Misguided Oil Strategy

date Date: January 20, 2016
date Author(s): Mamdouh G. Salameh
date Affiliation: World Bank - Oil Market Consultancy Service
Saudi Arabia has been instrumental in the collapse of the crude oil prices by refusing to cut production and also prevailing on OPEC not to do so. This has so far inflicted incalculable damage on the global economy. Saudi Arabia has taken a huge gamble by flooding the global oil market with crude oil with the intention of defending and enhancing its market share at the expense of its rivals such as Russia, Iran and Iraq and also slowing down if not killing US shale oil production altogether. This is a defunct policy which had been previously tried by Sheikh Ahmad Zaki Yamani in the early 1980s and found wanting. Saudi Arabia does not have very deep pockets to continue the oil war against others. Saudi Arabia’s misguided oil strategy is starting to rebound on its economy, financial reserves and its currency. Other than the steep depletion of its financial reserves and the huge budget deficits, intense pressure is growing on the Saudi Riyal for possible devaluation or even floatation. Instead of waging oil wars, Saudi Arabia should deal with the real challenges facing it such as the growing and endemic youth unemployment which continues to endanger Saudi Arabia’s national security and the need to create at least 3 million new jobs by 2020 in addition to diversification of the economy and elimination of the wasteful subsidies. All these issues need relatively high oil prices to finance them.

© 2011–2017 e-axes. All rights reserved. | Credits | Contact Us | Privacy Statement | Wed 24 Jan, 2018 13:16:09 PM
e-axes is proudly powered by Norder - Creative Solutions