Saudi Arabia Foreign Exchange Reserves -- June 10, 2021

The biggest story -- okay, maybe not the biggest story -- that honor might belong to the cicada flying into President Biden's right ear and then as if that was not enough -- a swarm of them shutting down Air Force 1 --  but I digress -- where was I? Oh, that's right -- the biggest story this month (so far, and there's a lot left of this month) was the announcement that:

• Saudi Arabia
• was selling
• dollar-denominated
• bonds
• to cover the ungodly annual $75 billion dividend
• for holders of Saudi Aramco stock.

By the way, another digression:

• the annual dividend is $75 billion;
• the tranche: $5 billion
• tell me again, how $5 billion in bonds will make any difference when the requirement is $75 billion?

We're back.

I thought with the price of oil surging and after the robust numbers in March (2021), Saudi Arabia was rolling in dough. 

Wow, was I wrong. Link here.

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The Oil Embargo Of 1973

Wiki entry here. 

Bottom line: biggest mistake Saudi Arabia ever made -- the embargo. Saudi's embargo was akin to shutting down 1,000 Keystone XL pipelines -- perhaps some hyperbole -- and what happened? Alternate solutions were found, including alternate sources of crude oil.

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US Crude Oil Imports

Link here, from all sources. The most interesting thing about this graph? How really little has changed from 1980 to 2021. Sure from 200 to 400 and back to 200 is a doubling and then a halving, but it's not like there's an exponential change in any part of that graph.

What is staggering to me, is the amount of oil "we" have come to depend on. This is simply not going to change any time soon. 

From wiki, the increase in US crude production and imports from 1969 to 1974 is staggering:

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Huge Disconnect

Those who think policies to cut CO2 emissions, including bans on new and existing fossil fuel pipelines, will end global demand for oil are simply out of touch with reality. Really out of touch with reality. Elizabeth Warren's press release today on the death knell of the Keystone XL is the best example of group think in an echo chamber devoid of any understanding of reality.

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Back to Saudi Arabia

Monthly production was way down, despite the headline: Saudi Arabia reports May crude oil production of 8.544 million bbls per day, above target. The next question, question: how much oil did Saudi Arabia use domestically for air conditioning?

The kingdom said it would pump 8.482 million bbls/day; the delta? Less than a percent. 

But it probably explains why Saudi's foreign reserves are trending so low. Whatever.

Let's see what happens when Iran re-enters the market. Biden presses to re-open the fossil fuel market for Iran and accepts Russian Nord Stream 2 and kills the Keystone XL. Must have played very, very well for his well-heeled political donors. Hey, by the way, the buzz in Washington is that President Biden putters around the White House every day while the real business of the Oval Office is being accomplished by a former president.