Saudi Arabia No Longer Has Cash For Big Projects; Iran Does; Update On The Glut At Cushing -- RBN Energy -- August 12, 2016

North Texas under heat alert. Real temperature 103 to 105 today; feel like temperature in direct sunlight this afternoon could be 115. I plan to be riding my bike about that time. Maybe I'll wear a cap today. Carry some water. 

Active rigs:

	8/12/2016	08/12/2015	08/12/2014	08/12/2013	08/12/2012
Active Rigs	34	72	194	184	199

RBN Energy: glut at Cushing.

Retail sales flat in July: flat vs 0.4% increase expected. Wall Street trifecta yesterday: Dow, S & P 500, and NASDAQ all hit new record highs on same day (first time that has happened since 1999). Americans have only three places to put their money month-over-month: retail sales; the stock market; ObamaCare. My hunch is that the Wal-Mart crowd -- retail sales were flat in July --is throwing their money into the stock market. A bubble, Trump calls it. Retail sales are flat and ObamaCare is unraveling (it was never "raveled" to begin with), so that leaves the bubble we call the "market."

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Prince Salman Has A Huge Problem 

Anyone paying attention knows that Saudi Arabia is facing a huge cash crunch.

The fact that Saudi canceled a huge solar energy project some months ago spoke volumes. Saudi no longer has the cash for big projects. From Bloomberg: Saudi Arabia "delays" $109 billion solar plant by 8 years. These projects are critical for desalination plants; desalination plants are not "nice-to-have" budget items for Saudi Arabia. They are in the "must fund" column.

It now appears that there is a very good chance Prince Salman's IPO will be a bust if he doesn't turn things around (see below -- the "$2 trillion mistake").

Meanwhile, Saudi's #1 adversary, Iran hardly seemed to miss a beat even under severe sanctions. Now that sanctions have been lifted, Iran is moving forward with huge projects and has gotten back to "full" crude oil production.

Those huge Iranian projects? Not solar energy. Nope, nuclear reactors.

Iran is permitted to pursue the construction of two newly announced nuclear plants under the parameters of last summer’s nuclear agreement, Obama administration officials informed the Washington Free Beacon, setting the stage for Tehran to move forward with construction following orders from President Hassan Rouhani.

Ali Salehi, Iran’s top nuclear official, announced on Thursday that Iran has invested $10 billion into the construction of two new nuclear plants after receiving orders from Rouhani, according to reports in Iran’s state-controlled media.

Saudi Arabia can't even "handle" Yemen. That war rages on and Saudi is losing so many tanks in that war, that it did not go unnoticed when they ordered more US tanks to replace what they've lost.

This has to absolutely scare the Hades out of Prince Salman. And unlike Saudi Arabia, Iran has a steady source of income: kidnapping and ransoms, which guarantee as much as a half a billion dollars for four Americans as long as President Obama calls the shots for the DOJ.

And apparently the "$1 trillion mistake" made by Saudi Arabia in October, 2014, could turn into a "$2 trillion mistake" -- if the Salman IPO is a dud. 

In the Mideast, this is the story to watch: the rise of Iran, and Saudi Arabia is watching it very closely, but may not be able to do much about it. We know whom Hillary supports.

Later: it is not going to get any better for Saudi Arabia. Almost everyone agrees Saudi Arabia could become a net importer of oil by 2030. On the other hand, global tight oil production will double by 2040, and most tight oil will come from the United States.  Russia, Canada, and Argentina will each produce a significant amount but nowhere near what the US will produce.