To the casual observer, Saudi Arabia might currently seem like an emboldened nation that is asserting itself. They’ve been challenging Iran, fighting rebels in Yemen, threatening to invade Syria, and if some rumors are to be believed, they are currently trying to attain nuclear missiles from Pakistan. However, these aren’t the actions of a stable nation that is asserting its dominance in the region. These are the flailing death throes of a nation that is struggling to hang on.
Ever since global oil prices started to plummet, Saudi Arabia just hasn’t been the same. That’s no surprise. Since prices fell, other oil rich nations have been hurting as well. Russia’s economy has been on the ropes, Canada is plummeting into a recession, and Venezuela is on the verge of total collapse. However, there probably isn’t any nation on Earth that is more reliant on oil than Saudi Arabia. If anyone is going to be destroyed by low oil prices, it’s the Saudi’s.
The crux of the matter is that this country is running out of money. It doesn’t look like it at first glance. They’ve only recently started to dip into their enormous savings, and their debt to GDP ratio is remarkably low. However, they are hemorrhaging money at an alarming rate. They’ve been flooding the market with cheap oil to drown out their competition (a dangerous gambit for a government that receives 80% of its revenue from oil) , and they’ve been fighting several expensive proxy wars with Iran, which are not going so well. The situation is so dire that the IMF expects them to run out of money within 5 years.
This post was published at The Daily Sheeple on MARCH 6, 2016.