Saudi Arabia has got a $98 billion deficit Watch

hoping4Astars
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Due to the falling price of oil their economy has really been hit hard apparently.
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batoot
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okay i may just be really ignorant of this topic area
but why don't they just raise the oil prices? is the US forcing them to keep it low or something
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MatureStudent36
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(Original post by hoping4Astars)
Due to the falling price of oil their economy has really been hit hard apparently.
So no source whatsoever?

Falling oil prices have hit oil producers rather hard. However Saudi oil is the cheapest oil to extract so they're still making money unlike other many other oil producers.
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hoping4Astars
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(Original post by batoot)
okay i may just be really ignorant of this topic area
but why don't they just raise the oil prices? is the US forcing them to keep it low or something
They can't raise their price of oil because then no one will buy it since other countries are supplying at a lower price (e.g. Dubai, USA) so everyone will buy from them unless they raise the price as well.
There is an organisation called OPEC that is made up of these countries that produce oil and they can decide to raise oil prices. However, the USA is not part of this group so they might not increase their oil prices. If this happened, no one would buy Saudi Arabian oil so they would lose even more money.

However, Saudi Arabia can stop producing oil for a while to decrease supply and push up the price. Unfortunately for Saudi Arabia, this means that they will lose a lot of money as selling oil is their main industry.

I'm not an expert myself to be honest.

EDIT: They can, however, increase their domestic prices for customers in Saudi Arabia only. They have decided to do this.
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MatureStudent36
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(Original post by batoot)
okay i may just be really ignorant of this topic area
but why don't they just raise the oil prices? is the US forcing them to keep it low or something
The last time oil prices dropped and Saudi attempted to raise oil prices by reducing oil production it hit them hard.

Saudi is still making plenty of money from oil. The reduction in oil prices hurts Saudis competitors even harder than Saudi and also makes shake oil extraction in the US economically unviable.

The low oil price doesn't actually benefit the US too much so I doubt they're pushing for it.
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the bear
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they should diversify into tourism or sth
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batoot
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(Original post by the bear)
they should diversify into tourism or sth
how many tourists r willing to wear abaya everywhere
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Bill_Gates
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Great news will be less bigotry in the world, long may it continue.
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hoping4Astars
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(Original post by MatureStudent36)
So no source whatsoever?

Falling oil prices have hit oil producers rather hard. However Saudi oil is the cheapest oil to extract so they're still making money unlike other many other oil producers.
http://www.theguardian.com/world/201...budget-deficit
http://www.telegraph.co.uk/finance/e...rice-rout.html

There is proof that they reached the largest ever budget deficit in Saudi history. This was because of the falling oil prices.They are clearly not making enough money so they decided to increase domestic prices.
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hoping4Astars
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(Original post by batoot)
how many tourists r willing to wear abaya everywhere
They should relax their stupid conservative laws and be more like the UAE. However, I just don't see it happening. Saudi Arabia just doesn't have anything going for it that Dubai in the UAE already has. They should have diversified earlier.
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batoot
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(Original post by hoping4Astars)
They can't raise their price of oil because then no one will buy it since other countries are supplying at a lower price (e.g. Dubai, USA) so everyone will buy from them unless they raise the price as well.
There is an organisation called OPEC that is made up of these countries that produce oil and they can decide to raise oil prices. However, the USA is not part of this group so they might not increase their oil prices. If this happened, no one would buy Saudi Arabian oil so they would lose even more money.

However, Saudi Arabia can stop producing oil for a while to decrease supply and push up the price. Unfortunately for Saudi Arabia, this means that they will lose a lot of money as selling oil is their main industry.

I'm not an expert myself to be honest.

EDIT: They can, however, increase their domestic prices for customers in Saudi Arabia only. They have decided to do this.
aah ok, thank you for explaining this
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MatureStudent36
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(Original post by hoping4Astars)
http://www.theguardian.com/world/201...budget-deficit
http://www.telegraph.co.uk/finance/e...rice-rout.html

There is proof that they reached the largest ever budget deficit in Saudi history. This was because of the falling oil prices.They are clearly not making enough money so they decided to increase domestic prices.
And yet they have a $675 billion sovereign wealth fund.

Oil prices go up as well as down. Saudi isn't going bankrupt any time soon.
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hoping4Astars
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(Original post by MatureStudent36)
And yet they have a $675 billion sovereign wealth fund.

Oil prices go up as well as down. Saudi isn't going bankrupt any time soon.
I never said they'll go bankrupt. I was just pointing out the flaws of an economy that is solely focused on producing one product.
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kka25
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(Original post by Bill_Gates)
Great news will be less bigotry in the world, long may it continue.
:five:
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Chrissy.98
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(Original post by hoping4Astars)
I never said they'll go bankrupt. I was just pointing out the flaws of an economy that is solely focused on producing one product.
Their deficit is nothing like the deficit of the UK and USA. It is a flaw that they are depending on this finite resource, but it is better to control its supply and to have a plentiful supply of such a vital resource for themselves than having to depend on others for it. OPEC lowered the price to undercut various other sources of energy like the USA's shale gas in an attempt to reduce their supplies, but because of their increasing deficit I think we should expect the price to increase relatively soon.
I read an article about Venezuela who are threatened by the decrease on the price of oil on their revenues - its hitting these countries hard. There never seems to be an ideal price!
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Holydude
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It is great news, I hope the oil price remains 'low' for many years to come, down with the tyranny!
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Jammy Duel
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(Original post by hoping4Astars)
I never said they'll go bankrupt. I was just pointing out the flaws of an economy that is solely focused on producing one product.
But part of that was them building up this massive fund so that they could afford to soldier on when prices slide and price other producers out of the market, it is the exact reason they didn't cut production last year to keep the prices up, and they can have the price go lower still and survive several years, after which they start getting the pile to grow again.
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StrawbAri
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This is why oil producing countries should diversify their economies (what Nigeria is trying to do now to lessen the blow of changes in oil prices). It's not wise for a country's economy to be >70% oil based
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MatureStudent36
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(Original post by StrawbAri)
This is why oil producing countries should diversify their economies (what Nigeria is trying to do now to lessen the blow of changes in oil prices). It's not wise for a country's economy to be >70% oil based
Saudi Arabia has been diversifying for many years.
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Dr Pesto
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(Original post by Bill_Gates)
Great news will be less bigotry in the world, long may it continue.
How does Saudi Arabia having a big deficit equate to there being less bigotry in the world?
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