For The Saudis, The World Is Moving Fast; Watch For The Saudis To "Depeg" The Riyal From The US Dollar -- April 3, 2016

Updates

April 19, 2016: Saudi Arabia takes out the $10 billion loan.


April 4, 2016: Update on Saudi's biggest ever economic overhaul. The hammer is dropping.

The government is in talks with banks to raise about $10 billion through a syndicated loan, two people familiar with the matter said last month. While Al-Sheikh declined to confirm the details and the potential size of the deal, he said it will be followed by the kingdom’s first international dollar bond as early as September.

“We’re doing it now because we actually don’t need the money but we want to prepare ourselves for the future to make sure that when we actually go to the markets and we really need the money, the markets, the investors, the financial institutions already know us."

Original Post

 

After a full weekend of moving, I don't have much time to blog, but I want to get this posted for the time-stamp.

Some time ago, as an update to an earlier note, I posted:

June 22, 2015: long article in Atlantic Monthly. A lot of data. Bottom line, Saudi Arabia is likely to be a net oil importer by 2040. The linked article did not mention that Saudi Arabia has announced that the $109 billion solar program has been delayed for eight years. Saudi Arabia has a severe cash flow problem. They are betting they can cripple the US oil and gas industry. By the end of calendar year of 2016 we will know if Saudi Arabia was successful.

Saudi's export data here. In around numbers, Saudi produces 10 million bbls of crude oil daily and exports 75% of it.

I doubt Saudi Arabia will go from exporting 7.5 million bopd  to 0 bopd overnight. So when analysts suggest Saudi will be a net oil importer by 2040 suggests that soon, perhaps starting as early as 2020, we might start seeing a steady decline (albeit very slowly) of Saudi exports.

And that explains Saudi Arabia's recent announcement that they are looking to monetize their assets and looking to become a major midstream and major downstream player ... soon.

I posted that as an introduction to link this article being posted by Forbes which suggests that Saudi's last weapon in the crude oil price war may be "unpegging" the Saudi riyal to the US dollar.