The Saudi reversal on the decision to sell shares in oil giant Aramco highlights all the flaws in MBS' reform drive
Trump is still convinced the 20th century isn’t over and that coal and oil will keep fueling us forever, but MBS understands the world is moving on. He is investing in solar power at home and in companies like Tesla (maybe) abroad.
But can MBS pull it off? NO, according to this article.
Haaretz
Beginning of the End for Crown Prince MBS' New Saudi Arabia
The Saudis import almost everything other than oil.
ReplyDeleteFood, cars, machinery, consumer goods -- everything.
Therefore when oil prices started to plunge in June 2014, the Saudis burned through all of their foreign currency reserves in order to keep purchasing imports, including US weapons. By 2015 the Saudis went from a trade surplus to a trade deficit. They became so desperate for foreign currency that they started thinking about selling assets such as shares in Aramco, the state oil company, which the Saudis ridiculously claimed was worth at least USD $2 trillion.
However, oil prices bottomed out on 18 Jan 2016, and have been rising ever since. By late 2016 the Saudis moved back to having a trade surplus (all consisting of oil). That’s why the Saudis have delayed (read: cancelled) the selling of shares in Aramco.
When the Saudis run out of oil, they will be finished. They will revert back to the primitive camel-humping medieval society that they have always been.
Solar power? Forget it. The Saudis are too wedded to their oil.