For Saudi, $60 oil is not much better than $40 oil, and long-term, Saudi can't survive on $60 oil.
Some takeaways from the graph above:
- 27 months of data are shown; Saudi's reserve assets decreased in all but six of those months
- but even with $110 oil for eight months (2014), the kingdom showed outright losses in two of those months, and minimal increases in most of the other months; during this period Saudi consistently said it "liked" $100-oil but in fact they needed a higher price; in June, 2014, at prices > $110 (and trending upward), the kingdom showed a negative growth in reserve assets
- in the past 14 months, the kingdom has lost almost $150 billion in reserve assets
- there's more to reserve asset management than just the price of oil; in January, 2015, despite an average price of Brent lower than it was later in the year, the kingdom showed a slight increase; for the entire rest of the year, significant decreases
- look where John Kemp has set the "x" axis: at $100 oil; in 2017, it will be interesting to see if the graph is re-set to reflect $60 oil
- in February, 2015, when average price of Brent was $60, the kingdom lost $20 billion; based on most recent losses, it does suggest that the kingdom set $60/bbl as the basis for their 2016 budget