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.
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.