• 4 minutes Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 7 minutes Who Really Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 11 minutes Trump Will Win In 2020
  • 15 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 8 hours Iran Vows Major War Even If US Conducts "Limited Strikes"
  • 6 hours Europe: The Cracks Are Beginning To Show
  • 7 hours Memorize date 05/15/2018 cause Huawei ban is the most important single event in world history after 9/11/2001.
  • 5 hours When Trying To Be Objective About Ethanol, Don't Include Big Oil Lies To Balance The Argument
  • 4 hours Hong Kong protesters appeal to Trump for support.
  • 3 hours Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 3 hours Ban Fracking? What in the World Are Democrats Thinking?
  • 13 hours Shale profitability
  • 8 hours LA Times: Vote Trump out in 2020 to Prevent Climate Apocalypse
  • 49 mins Millennials: A boil on the butt of the work ethic
  • 19 hours One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 6 hours US and China are already in a full economic war and this battle for global hegemony is a little bit frightening
  • 3 hours Let's shut down dissent like The Conversation in Australia
  • 1 day A little something for all you Offshore swabbies
  • 16 hours Yawn... Parliament Poised to Force Brexit Delay Until Jan. 31
Alt Text

Trade War Weighs On Western Automakers In China

Western automakers in China are…

Alt Text

Did Venezuela Just Default?

S&P Global Ratings declared Venezuela…

Daniel J. Graeber

Daniel J. Graeber

Daniel Graeber is a writer and political analyst based in Michigan. His work on matters related to the geopolitical aspects of the global energy sector,…

More Info

Premium Content

Why Riyadh Cares about the "Fiscal Cliff"

Oil revenue made up more than 90 percent of the total revenues for Saudi Arabia despite a steady decline in production. With a choppy 2012 drawing to a close, the Saudi finance minister said the kingdom had run a multibillion-dollar budget surplus. Despite a tense economic year, the ailing Saudi king, for his part, said there was "plenty of wealth" in the kingdom. Production from non-OPEC members could put a strain on Riyadh's budget for next year, however. And, should lawmakers in the United States fail to reach a budget deal before markets re-open Wednesday, oil prices could slump further on concerns of a recession from the world's top oil consumer.

Riyadh in 2012 offered a balance to oil markets struggling with lower production volumes from Libya and Iran. Saudi Finance Minister Ibrahim al-Assaf said last weekend that oil sales helped create a budget surplus for 2012 that was around $102 billion. At the height of early tensions with Iran this year, the kingdom produced around 9.9 million barrels of oil per day. With oil revenue exceeding expectations for the year, ailing King Abdullah said "there is plenty of wealth" for the country. Assaf, however, said it's best to be cautious given production increases from other major producers. Global market conditions for 2013, he added, may spell trouble for a country that depends on oil to maintain its leadership position among Arab economies.

Related Article: Did Big Oil Kill Off Green Energy?

Crude oil imports for the United States, meanwhile, are down to their lowest level in 12 years. New technologies used in the production of shale oil means the country, the world's largest oil consumer, is pumping about 7 million barrels of its own oil per day, the most in nearly 20 years. Despite the boom, failed budget negotiations could put the world's leading economy into a tailspin.  U.S. President Barack Obama said during the weekend that it would be "very hard" to keep his economy moving forward in 2013 without some sort of agreement from lawmakers who so far seem very far apart on reaching a budget deal. A $536 million tax increase, coupled with a $110 billion loss in government spending, may push the U.S. economy back into recession in 2013.

By November, Saudi Arabia was producing about 9.6 million bpd, reflecting an overall decline among members of the OPEC cartel. For the economy next year, the country's finance minister said he expected the budget surplus for the oil-driven economy to be $2.3 billion, which would represent a significant decline from 2012 figures.

Republican lawmakers in the United States accused Obama of embracing a "skewed" economic agenda that would hurt jobs prospects for most Americans. In 2011, political bickering in the United States prompted Standard & Poor's to cut the country's rating from AAA to AA+ for the first time ever. Fitch Ratings had said it may cut its U.S. rating should lawmakers fail to keep the economy from falling off the so-called fiscal cliff. Among the most contentious issues are tax cuts for the wealthiest Americans, which Republican leaders view as the lifeblood of the American economy. But with Riyadh saying it's best to be "conservative" with its 2013 budget, it's not just rich Americans that may be impacted by the inability of U.S. lawmakers to compromise, but the entire global economy as well.

By. Daniel J. Graeber of Oilprice.com




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play