As the US-Saudi 'secret' oil deal continues to depress the price of oil [12], pressure Russian revenues, squeeze European budgets [13], and raise doubts about the status quo (OPEC and the rest of the world) [14], not all of The Kingdom's elites are happy. Infamous billionaire Prince Alwaleed bin Talal has written an open letter [15] to Oil Minister Ali al-Naimi and other ministers, as Reuters reports, saying the world's top oil exporter should start worrying about the recent slide in global oil prices and warned against the negative effect of such a drop on the state revenue: "Ninety percent of the 2014 budget is based on it (oil), so to underestimate (these implications) is in itself a disaster which cannot pass unnoticed," he wrote in the letter.
Saudi's budget breakeven oil price is $86.1 in 2014, according to International Monetary Fund (IMF) estimates. But, as Reuters reports, not all the Saudi royal family are happy...
Saudi billionaire Prince Alwaleed bin Talal said the world's top oil exporter should start worrying about the recent slide in global oil prices and warned against the negative effect of such a drop on the state revenue.
In an open letter to Oil Minister Ali al-Naimi and other ministers, dated Oct. 13, Prince Alwaleed said he was "astonished" about comments reportedly made by Naimi aiming "to alleviate the substantial negative implications on the Saudi budget and economy due to the big drop in oil prices".
He was referring to comments made by the oil minister in Kuwait on Sept. 11 where he played down concerns about the drop in oil prices below $100 per barrel.
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Last week, Saudi officials briefed oil market participants in New York on the kingdom's policy, making clear that Saudi is prepared to tolerate a period of lower prices - perhaps as low as $80 a barrel - in order to retain market share, Reuters reported on Monday.
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Prince Alwaleed has repeated previous warnings that the Gulf Arab kingdom needed to reduce its reliance on crude oil and diversify its revenues.
He said in the letter, posted on his Twitter account on Monday, that the kingdom's budget this year and in 2015 could incur losses worth billions of riyals.
Owner of international investment firm Kingdom Holding, Prince Alwaleed is unusually outspoken for a top Saudi businessman.
But his warning may reflect growing concern in private among many Saudis about the impact of declining oil prices on the country's economy and its dependence on oil revenues.
"Ninety percent of the 2014 budget is based on it (oil), so to underestimate (these implications) is in itself a disaster which cannot pass unnoticed," he wrote in the letter.
Full Alwaleed letter here (in Arabic) [15]
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As we concluded previously: [14]
This is a major development in world politics, it’s not just some financial market-driven move.
World power relations are being hugely changed on the fly as we’re all watching and trying to figure what to make of all this. One thing’s for sure: the world will never be the same.
Why it happens now is a great question, which is impossible to answer. And that’s fine: it’s enough to try and understand exactly what is going on, let alone why.
But I bet you it has to do with the US and Europe realizing they can no longer keep pretending their economies are growing or recovering or doing fine.
We’ve landed in the next phase of what arguably started in 2007, but what you could place back many years before that, an economic system based on the fantasy that is debt driven growth, inflated by a factor of a trillion, give or take a few zeros.
That system is in the process of dying. And the people who have tried to make you believe, and succeeded, that it would all be fine in the end, are now jockeying for position in the aftermath of the demise of a world built on debt.
And they are the same people who built that world, profited from it to an insane degree, and want to use those profits to hang on to power in a world that will be dramatically different from the one they called the shots in. And that doesn’t bode well; it tells us violent clashes will be on the horizon.
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And today we already see tensions in The Kingdom rising:
- *TWO U.S. CONTRACTOR EMPLOYEES SHOT IN SAUDI ARABIA: OFFICIAL
- *U.S. OFFICIAL SAYS ONE DEFENSE CONTRACTOR KILLED, ONE INJURED
As Bloomberg reports, U.S. Saudi Embassy Issuing Security Message After Shooting
We are in the process of evaluating our security posture and will take appropriate steps to ensure the safety of all U.S. mission personnel,” State Dept spokeswoman Jen Psaki says in e-mailed statement
Says U.S. embassy is issuing security message to advise U.S. citizens of situation, security precautions
Not good.
