Oil Price Slump May End up Exhausting Saudi Arabia's Cash Reserves in the Next Five Years

Published By : 23 Oct 2015 | Published By : QYRESEARCH

If the prices of oil continue to remain as low as US$50 per barrel for the next five years, analysts say that Saudi Arabia could run out of cash. 

The effects of the continuously tumbling prices of crude oil on a global front are started bieng felt in one of the largest producers of oil of the globe, which also happens to be the leader of the OPEC organisation, Saudi Arabia. Bahrain and Oman are also said to be afront similar future conditions if the circumstances continue to remain tight for the oil market. Since the prices of oil started slumping, Saudi Arabia has lost nearly US$73bn.

The prices of oil had even slumped down to as low as $45 per barrel of oil over summer this year from the peak prices of nearly $100 per barrel. Analysts project that if the conditions remain same, they could cost this region alone as much as $360bn by the end of the year.

For ensuring sustained finances, analysts say that global oil exporters will have to manage their revenues and spending structures effectively.With its current price structure, Saudi Arabia barely has cash reserves that can last for as much as for the next five years. 

The region is undergoing even more turmoil owing to the rising instability, which has led to inceased budgets bieng alloted to military expenditures. Saudi Arabia, which is fighting in Yemen currently, has taken over Russia to become the third biggest spender on Military on the global front.

Saudi Arabia's foreign reserves, which currently sum upto nearly $654bn, are also being quickly exhausted, and 90 percent of the revenues come from oil.Analysts cite that the turmoil in oil prices could account for nearly 20 percent of the country's GDP this year.

Back To Top