Something Is Very Wrong In Saudi Arabia...

Tyler Durden's picture

Ever since Kazakhstan stormed onto the radar of market participants who, prior to last week, didn’t know the country existed, the world has awoken to the fact that a sharp and persistent decline in oil, that most financialized of commodities, comes with very real and far-reaching consequences. 

For producers, crude’s slide strains budgets and pressures FX reserves and as we documented at length on Sunday in "Saudi Arabia Faces Another 'Very Scary Moment' As Economy, FX Regime Face Crude Reality," nowhere is this more apparent than in Saudi Arabia where the country faces a fiscal deficit on the order of 20% and the first current account deficit in a decade.

The situation has some betting that Saudi Arabia will not be willing (or able) to retain the riyal’s peg to the dollar and as you can see from the 12-month forwards, it might be time for sellside FX strategists to reconsider their position that the currency regime isn’t likely to change anytime soon.

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JustObserving's picture

Karmic payback for being the focus of corruption and criminality for decades.  The Western media is ignoring Saudi Arabia's war in Yemen.

Here is a partial list of Saudi Arabia's crimes in Yemen:

At least 3,500 have been killed as a result of the Saudi-led war, launched on March 26 of this year. Some 1,700 of these have been confirmed as civilians, according to the UN, with some 3,800 more civilians confirmed wounded.

Nearly 80 percent of the Yemeni population faces conditions of starvation, near starvation, and/or lack of reliable access to drinking water.

More than 1.2 million Yemenis have been forced to flee their homes by the war. At least 50,000 of the displaced have fled the country entirely, seeking refuge in neighboring countries of Oman, Djibouti, Somalia and Sudan.

Responsibility for the bloodshed and humanitarian disaster in Yemen lies squarely with Saudi Arabia, the other Gulf monarchies and their backers in Washington. While technically headed by the Saudi monarchy, the military onslaught against Yemen is a direct outgrowth of US imperial policy in the Middle East.

NoDebt's picture

Mecca and Riyadh will be sacked and plundered in less than 2 years.

Probably by US-backed "Moderate Muslim Freedom Fighters".

Baa baa's picture

And bombed into glass in 2.5

WarHorse's picture

It is a crisis of their own making.  Saud started and is maintaining the oil price war.  This is all by design

NotApplicable's picture

The Fed is the one that started the oil price war. Looks like the House of Saud is merely trying to keep their place in the pecking order.

As I tell everyone, no producer can compete with people who can leverage free money. Saud's are ramping up production in desperation, trying not to be the weakest hand.

my wag's picture

@ NotApplicable

What free money? The Fed's low interest rate? That's hurting the US more than helping. Less ROI for all the people saving and drawing on retirement money is actually putting less money into the hands of those who spend it. The corporate welfare enabled by the low interest rate is the result of the Feds capture by Banksters and Financialization....which is also hurting our economy.

As far as the House of Saud and Saudi Arabia. Or should I say the largest underwriter of Islamic terrorism?

Remember World Trade Center 1993 bombing? 9/11; British bombing, Spain.....? Ring a bell yet?

We have shifted towards Iran as a counter to the Saudi dream of a World Islamic Caliphate.

TahoeBilly2012's picture

"We will return the mid east to the stone age..." (the cabal)

Lugnut's picture

...after the 'moderates' are replaced by ISIS seeking to establish the Caliphate in Mecca.


Alan's Snackbar!!!

MalteseFalcon's picture

So Turkey and Saudi Arabia have been sucked into the maelstrom.  Who borders these guys?  They're probably next.

Gonna need a bigger blender.

KnuckleDragger-X's picture

The headline is stating the obvious, but not to worry, the Saudi's have the best friends that money can buy.......

NoDebt's picture

We're NOBODY'S friend any more.  Anyone depending on us for support or defense is in for a rude awakening.

KnuckleDragger-X's picture

President Zippy is now BFF's with Iran now, so no worries......

Stumpy4516's picture

The people of Yemen are being abandoned by everyone.  Except maybe the govt of Iran.

Putin voted for the sanctions and naval blockade of Yemen.  By giving Russia's consent for the sanctions and thus cooperating with Washington and the Saudis the people of Yemen face a bleak future.

SmittyinLA's picture

Overopulation is Islam,  it's a religion designed for human husbandry, farming humans-like cattle, and newsflash without the Syria MENA wars there'd still be a firehose of Muslims at Europe's door, wars actually kill off population, mitigate overpopulation.

Coming soon to a nation without borders, starvation and water shortages, suppose our food import credit is cut?


Mensch's picture

Couldn't happen to a nicer group of autocrats.

clade7's picture

Good!  Those fuckers have had it too easy for to long...

pods's picture

Seriously. Once all our oil is pumped, it will go back to a shitty sand box. Oh, and with pissed off nutcases.


bonin006's picture

I'd like to know how they got all our oil in the first place.

847328_3527's picture

How can you say that? The Sawdees are our friends. Best of freinds with the Bushes too.

Ben Burnyankme's picture

Their camels will now have revenge...

CheapBastard's picture

Don't joke; camel meat is soaring in price. It's almost becoming impossible to have a nice camel-dog-on-a-bun snack before a stoning or beheading these days. Takes the fun out of the event.

killieboy's picture

The cocky Ayrabs are being brought to heel.

Tjeff1's picture

Ending of the Petrodollar is at hand.  HAHAHAHHAHAHAHHHA

HonkyShogun's picture
HonkyShogun (not verified) Tjeff1 Aug 24, 2015 11:14 AM

<- To be replaced by global digital currency

<- To be replaced by barter

undercover brother's picture

Saudi has only one commodity export and the world is currently oversupplied with it.  In this case even a devaluation won't help.  Better luck next time.

WarHorse's picture

It is oversupplied because the Saudis have purposely started a price war.  Look at their oil production numbers.  THis is by their design to maintain market share by crushing Canadian Oil Sands and U.S. shale producers 

Lugnut's picture

The Saudis are betting that they have enough of a dollar stockpile to ride out the storm until they can push our shale producers out of the picture and 6 feet under. They might be selling under production costs, but its at a rate that is still less than everyone else.

Its a risky gambit, but the fact that they are willing to take the gamble makes you realize they think they have no other cards to play.

0Theorem's picture

none of this is very funny, though expected in the runup...

Baa baa's picture

There are times when laughing is the only response left to us. The humor is black or red...

Avichi's picture

"Benevolent Dictators"

Conax's picture

Sheik Faisal has put his maid's 767 up on Craig's list..

The man with pointy horns's picture

The slow death of King Dollar. The DXY has lost almost is down from 97 to 93 in four days- as the US stock market followed with it. In QE1 and 2 the DXY fell as stocks rose. In QE3 the DXY more-or-less flatlined as stocks rose. Then the DXY appreciated by 25%, stocks meandered, and I just knew something really nasty was going to happen later.

Now, in the last 4-5 days, every time the DXY is going down so are US stock markets. Let's not forget the DXY flash crash this morning which perfectly coincided with the few thousand other flash crashes in various stocks. The classic thing of investors rushing to buy the US dollar in times of crisis is not happening.

So what pray tell shall happen when the Fed becomes more dovish, or does not raise interest rates or even (probably pretty likely) initiates QE4? Perhaps for the first time a depreciating dollar is not the magic cure for everything.

p.s. What a soap opera this day has been. Chinese Black Monday, flash-crash 2.0, it is insane.


bnbdnb's picture

Its telling me that stock sellers are NOT dominant USD holders, most likely foreign investment.

3rdWorldTrillionaire's picture

Correct -- massive global carry trades being unwound

Manipulism's picture

What if...the Chinese begin to SELL Dollars?

They will

I Eat Your Dingos's picture

I'm short on the House of Saud lol. Time for a regime change anyway....USSA will need to invade to ensure a puppet regime to maintain petrodollars and oust China from cheap oil.

TheFutureReset's picture

The USSA will use proxies to invade you mean, right? like ISIS. The relationship between the USSA and Saudi is very strained, just look at the Iran deal. Things could be very messy. The reason the Saudis joined with the US in the first place is because they are beset on all sides by enemies. I think the Sauds are back on the market, looking for a protector, and in the mean time they will pump oil with no regard for anything. 

Dr. Engali's picture

"Something is very wrong in Saudi Arabia"


Yeah, it's ruled by a corrupt regime who'se lived well off of the wealth of the nation while the rest of the country has paid the price and their day has come. 

NoDebt's picture

Just wait till you see the next regime.

Dr. Engali's picture

I have a hard time fighting the desire to see that whole place turned into a sheet of glass.

csmith's picture

When forced to compete...they can't!

buzzsaw99's picture

saudi has a metric shitload of reserves

Fred123's picture

It's their turn to burn.

ZZR600's picture

They already are...GDP-boosting Saudi tank trashing


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Video 4

847328_3527's picture

Sawdee stawk market down;


Sawdee beheadings up.

Stonings up.