• 6 minutes WTI @ 67.50, charts show $62.50 next
  • 11 minutes Saudi Fund Wants to Take Tesla Private?
  • 17 minutes Why hydrogen economics is does not work
  • 3 hours Starvation, horror in Venezuela
  • 25 mins The EU Loses The Principles On Which It Was Built
  • 5 hours Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 15 mins Crude Price going to $62.50
  • 10 hours Anyone Worried About the Lira Dragging EVERYTHING Else Down?
  • 3 hours Chinese EV Startup Nio Files for $1.8 billion IPO
  • 15 hours Correlation does not equal causation, but they do tend to tango on occasion
  • 14 hours Oil prices---Tug of War: Sanctions vs. Trade War
  • 3 hours WSJ *still* refuses to acknowledge U.S. Shale Oil industry's horrible economics and debts
  • 14 hours Russia retaliate: Our Response to U.S. Sanctions Will Be Precise And Painful
  • 16 hours Monsanto hit by $289 Million for cancerous weedkiller
  • 23 hours WTI @ 69.33 headed for $70s - $80s end of August
  • 6 hours < sigh > $90 Oil Is A Very Real Possibility
Alt Text

China’s Oil Futures Jump To Record High

China’s Yuan denominated crude futures…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Trending Discussions

Fund Managers Have Their Own ‘Black Monday’ Thanks To The Saudis

Fund Managers Have Their Own ‘Black Monday’ Thanks To The Saudis

The ongoing slump in oil prices is forcing Saudi Arabia to retrench and bring home tens of billions of dollars that it has overseas.

Bloomberg reports that Saudi Arabia has pulled out between $50 and $70 billion that it has invested around the world with asset managers. The withdrawal of funds occurred over the past six months. The staggering sum is a sign that the massive OPEC producer is scrambling for financial resources to plug its widening budget deficit, as well as cover the mounting costs for its military campaign in Yemen. Related: Iran Deal Opponents Try A New Approach

Saudi Arabia’s sovereign wealth fund hit a peak of $737 billion in August 2014, but has fallen by at least 10 percent since then as oil prices have collapsed by more than half. As of July 2015, the fund’s assets stood at $661 billion, as the country has been forced to tap foreign exchange for its large budgetary needs. Oil makes up 80 percent of Saudi budget revenues, but its budget deficit his ballooned to 20 percent of GDP.

Of course, with the third largest sovereign wealth fund in the world, Saudi Arabia can keep up this pace for a few years, if it really wants to. And by all accounts, the Saudi leadership is playing the long game. It is willing to put up with short-term pain if its strategy of pursuing market share works out over the longer-term. Saudi Arabia’s economy is not diversified – it is entirely dependent on oil. Related: The Peak Oil Story We Have Been Told Is Wrong

So squeezing out higher-cost oil producers around the world, even if it means deficits for a few years and a drawdown in its foreign exchange, could work to the country’s advantage over the coming years and decades as it claws back influence and market share. It is a risky bet, and it is not clear that it will work out – especially since U.S. shale could bounce back when oil prices rebound – but Saudi Arabia sees few alternatives.

For now, that means that Saudi Arabia will have to bring cash home, withdrawing billions of dollars’ worth of assets from abroad. That could slam the asset managers that are managing Saudi money, with one manager calling it their “Black Monday,” according to the Financial Times.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News