Maybe they can use some of they money they invested in wework and such

Hilarious that while the rest of the market was booming they were losing billions.

I think it would be silly to assume that their only incestments were in the vision fund. Those were surely expected to be high risk.

It wouldn’t even be that surprising for a sophisticated investor to have some funds which lose money while the market is booming (eg even the best performing short selling funds lose money) as they may be hedging against the market no longer booming.

Ahh okay, I guess I would've expected to hear about the investments which are so successful that they are balancing out the VisionFund and negative oil margins. Let me know if you have any sources that show their foreign investments have been profitable enough to offset these losses.

To my ears they are actually in a very dangerous place in terms of runway for maintaining a civilization in the desert during catastrophic climate change.

Who would want to go there and do business with them? They are led by murderous despots with missiles pointed at them from multiple directions (Iran/Syria/Israel/Yemen). A country best known for financing the 9/11 attacks. Good grief.

Regimes like this often underestimate their own stability. There are tons of useless princes and government workers that are not really in a position to revolt if they get less money.

Unless there is a serious rift in the top level elites, they can survive.

The history of Saudi Arabia is the history of factional infighting in the Said family. MBS is not yet King and his rise & rule have ruffled a lot of feathers.

That said, the system of keeping the royal family fat and happy with lavish stipends is entirely by design.

The history of Saudi Arabia is also one of stability and much more consensus then infighting.

There are clearly more people getting payed, then strictly needed. I'm not saying it will be smooth, but they also all understand what happens to them if the Muslim Brotherhood or even AQ takes over Saudi Arabia. The US understand that also.

Ya, and they were diversifying into tourism which is also bust.

I’m sure they’ll survive though. Their wealth is in the trillions.

The Saudi budget is a quarter of a trillion dollars. “Trillions” doesn’t last very long at those levels.

Sounds like at least 4-5 years.

+ increased borrowing costs as the deficits begin to worry investors.

Saudis aren’t exactly known for their adherence to austerity.

They will have to make due with BMW and Mercedes Benz.

Foreign reserves are only about 1/2 trillion and dropped about 5% last month. They aren’t in the best position, and the longer this goes on, the more the downside accelerates. Once people think you’ll run out soon, you’re screwed.

At these prices, SA can’t just turn oil into dollars (well, not many dollars anyway).

[0] - https://www.middleeastmonitor.com/20200430-saudi-foreign-res...

I imagine that foreign creditors will allow KSA to get much closer to 0 than they’d allow most other countries because KSA has a clearer path to repayment; bow out of the current oil production spat with Russia. But spending down 5% in one month is alarming.

Venezuela and Syria have survived much worse with fewer resources. There will definately be enough money for the police and military.

Those countries are not surviving. They are failed states.

Edit: So too will be Saudi Arabia; they waited too long to take meaningful action to diversify away from oil revenue. Norway is the model for how to avoid the resource curse.

https://en.wikipedia.org/wiki/Resource_curse

Yes they are abysmal failed states but the parent said "government". The regimes in those countries are still in place and have survived. The rulers and recipients of their patronage are still in charge.

But Syria wasn't exactly an oil-rich country. Sure they had some oil but not game changing levels like in the Gulf.

Also notable is that Syria is a "failed state" largely because of the oil money pumped into the opposition by those same Gulf States.

And political machinations by their neighbors (Israel, plus Lebannon pushing the Alawites north) and other interested parties, e.g. the US supporting anti-Assad militias, Russia backing Assad, etc.

I think it's arguable that either of those countries survived.

That's what the US troops are there for. The US needs the Saudi dictators to maintain their influence in the region.

Needed, past tense. US foreign policy used to be shaped around our need for Saudi oil, and IMO hasn’t properly adjusted to the fact that America is energy independent again. The realpolitik question now isn’t “how can I secure Saudi oil” But rather “what’s the least I can do to reduce any risk of terrorism”.

FWIW, I would not underestimate the degree to which foreign powers that are, otherwise, irrelevant to US interests can capture parts of the US political system. It is an unfortunate fact that political influence is not all that expensive to purchase.

C'mon now, for years the largest source of foreign oil going into the US was from Canada. Even today, Canadian oil accounts for 40% of imports, with the KSA a distant 11% [1]. The whole energy independence as a form of security through reduced financing of questionable governments thing was a red herring, even if you're worried about the northern border.

Imports remain around 7 million barrels of oil per day, down from a high of 9. What's shot up is exports. Oil imports into the US haven't changed much.

The US continues to "need" to import just as much oil as they always have from the KSA. [2] Even Canada imports from the KSA, for a lot of reasons [3].

Keep in mind, too, the largest supply of oil in the world is under Venezuela, with 18% of the global supply.

[1] https://en.wikipedia.org/wiki/Petroleum_in_the_United_States

[2] https://en.wikipedia.org/wiki/Petroleum_in_the_United_States...

[3] https://nationalpost.com/news/canada/why-has-canada-spent-bi...

The Canada thing is a good point, I always forget how much of our imports come from our peaceful neighbors.

America continues to import KSA oil mostly because California won’t frack, which could be changed if necessary.

As far as continuing to import, I believe that’s a factor of oil and refinery quality. America has some amazing refineries capable of eating garbage quality oil, including diluted tar. Since fracking produces high quality oil, my suspicion is that it’s cheaper to export that to older refineries, and import lower quality crude to refine domestically. But I’m no expert here.

The article about why Canada imports oil is interesting. Some of the Maritimes are cut off from pipelines, and aren't set up to refine bitumen. It's actually just cheaper to buy KSA oil than solve these problems. I wonder if this is true in the US since I was under the impression West Texas Intermediate was pretty comparable to Arab Light. I'd love to learn more about the specifics here.

IIRC many American refineries were retooled at great cost to eat both Canadian and South American oil, which is lower quality than the Arab stuff; nobody expected that fracking would suddenly produce a glut of really high quality oil.

Also, good quality oil can be used to dilute thicker oils to the point where refineries can process them. It’s my understanding that this is how you process Venezuelan oil for example. It wouldn’t surprise me to find out that American oil is being exported to blend other stuff before refining.

Well US troops are there to be a check on Iran, China and Russia. Terrorism is a rare side effect.

The presence of US troops in Saudi Arabia was a primary motivation for Bin Laden and 9/11.

This is nothing new, the US has been there since WW2.. Before that the UK. People forget history.

Don’t forget France

It's not only about the US need for Saudi oil.

It's about controlling the access to oil of friends and foes. Can't be the global hegemon without controlling that access.

And it's also about keeping oil being billed in US dollars. That's why the US can print as much money as they want (well, almost).

The Saudi’s have burned through generations of radicals by exporting them to other conflicts. Afghanistan, Balkans, Chechnya, Somalia, Indonesia, Libya, Iraq, Syria and Yemen.

With an ever increasing population and shrinking pot of gold, I’m thinking Syria Part II once the current regime in Washington DC is removed.

For neoliberals, like neocons, Terrorism is a feature - not a problem. Neither have had a seat at the table for the last 4 years, but they’re not going to let this opportunity go to waste.

And we’re going to pay for it.

The US "was" energy independent. But now all the US oil drillers are shutting down. The same factors hurting Saudi are hurting oil in the US.

Yeah, but now we’ve proven that we can supply our own oil without it being a major drag on the economy.

We may go back to importing one the short term, but losing access to Saudi crude is now a 100% solvable problem, because all we need to do is ramp up fracking again.

While price drops can hurt US oil companies, the US is now immune to price spikes, since it can spool up oil production quickly.

Maybe Congress needs to bail out oil producers during a glut, but that’s a lot cheaper than Saudi having to run most of their economy on credit.

The US oil business has always been boom or bust.

After prices rise the oil will still be there.

> US foreign policy used to be shaped around our need for Saudi oil

US foreign policy is shaped around making sure the whole region remains in conflict. That allows for more weapons sales, cheaper oil due to infighting, and excuses to intervene and have the military there.

America no longer wants cheap oil; it crowds out the natively produced stuff. Gasoline is currently < $1/gal in many states due to the production glut and pandemic, and the president is currently talking about how to increase the cost of oil.

I don't think that everyone has fully grasped how America being energy independent changes the game.