Saudi Arabia Budget, 2020 -- December 10, 2019

Saudi Arabia: plans for lower 2020 revenues [note: numbers rounded in some cases):

• revealed its 2020 budget, yesterday (December 9, 2019)
• will reduce annual spending by 2.6% from 2019
• 2019: record spending: $280 billion
• 2020: planned, $270 billion
• oil revenues will dip 
• 2020: $137 billion
• 2019: $161 billion
• Saudi says it has "exceptional profit in 2019" but did not elaborate
• budget deficit will widen
• 2019: 4.7%
• 2020: 6.4%
• And here it is, the best "official" breakeven price for Saudi Arabia, for 2020: $83.60/bbl to balance its budget.
• "GDP":
• 2019: 0.4%
• 2020 estimate: 2.3%

Observation: it would be interesting to know why Saudi had "record spending" in 2019; military expenses is about all I can figure, unless increased exploration costs (we've talked about this before); unknown whether "increased spending" included "whatever it takes" to get back to normal after drone attack; wait until Saudi announces austerity measures. 

Best monthly data point to follow: Saudi Arabia's foreign exchange reserves.

Next shoe to drop: NOPEC bill in the US House, White House.

Saudi budget, one man's opinion, what a doofus, unless he's talking about mere survival: based on oil price in the high $50s/bbl. Link here. Another says, $55. I assume they are talking Brent and/or OPEC basket, not WTI.

Price of oil when doofus posted the above:

• Brent: $64
• OPEC basket: $65

Going forward, link here:

• Raymond James:

Raymond James was more supportive of the market outlook. The bank sees WTI averaging $65 per barrel in 2020 and Brent averaging $70. But it sees the upward trajectory accelerating into 2021, with WTI averaging $75 and Brent averaging $80. “To underscore, all of these forecasts are still well above consensus and futures strip pricing, so we remain emphatically in the bullish camp on oil,” Raymond James said in a note on December 9.

• Goldman Sachs: 

Others are more skeptical that the deal actually throws a lifeline to U.S. shale. “This higher spot price forecast does not lead us to raise our 2020 US shale production growth forecast which remains at 600 kb/d. Poor financial performance, excess leverage and an increased focus on emissions have pushed the cost of capital of shale oil producers sharply higher, with this pressure no longer delivered by oil prices but by equity and debt markets,” Goldman Sachs analysts wrote in a note on December 6. “We therefore expect the recent shale restraint to persist even at moderately higher prices given it will take years to clean up the debt, capacity and emissions excesses.”