Fitch Sees Saudi's Oil Price Averaging $35/Bbl In Current Calendar Year -- April 13, 2016

Updates

April 14, 2016: how Saudi Arabia hopes to transform itself economically. I'm post this article because it confirms the "price point" I made in the original post (pasted one day ago):

People familiar with the National Transformation Plan said it was born late last year in discussions between Prince Mohammed and a few other top officials. At the time, oil was sinking below $30 (£21.1) a barrel, about half the low point that had been expected. That saddled the kingdom with an annual budget deficit near $100 billion and strengthened the case for radical changes.

The plan is still "secret" but based on what is known about it, it's an incredibly small step to be taken by a very, very conservative (medieval) monarchy.
 

Original Post

 

The headline caught my attention: Saudi Arabia gets credit rating downgrade, as reported in USA Today. But the real story was in the fourth paragraph:

The move stemmed from Fitch's assumption that oil prices will average about $35 per barrel in 2016 and about $45 per barrel in 2017.

For as long as most folks can remember, Saudi Arabia set their national budget based on $100 oil. Then in 2015, Saudi Arabia set their 2016 (this year's) budget on $60 oil, which seemed to confirm the "word on the street" that Saudi Arabia never expected oil to drop below $60/bbl as an average for an entire year.

I've run the numbers under several scenarios. I don't know how "we" get to $60 oil as an average this year. Fitch suggesting that the 2016 (this year's) average will be $35/bbl, suggests that Fitch sees new lows this year.