18 Jun '17, 3am

PetroDollar System In Trouble As Saudi Arabia Continues To Liquidate Foreign Exchange Reserves

PetroDollar System In Trouble As Saudi Arabia Continues To Liquidate Foreign Exchange Reserves

The stabilization of oil prices in the $50-60/bbl range was meant to have one particular, material impact on Saudi finances: it was expected to stem the accelerating bleeding of Saudi Arabian reserves. However, according to the latest data from Saudi Arabia’s central bank, aka the Saudi Arabian Monetary Authority, that has not happened and net foreign assets inexplicably tumbled below $500 billion in April for the first time since 2011 even after accounting for the $9 billion raised from the Kingdom’s first international sale of Islamic bonds. ….. Whatever the reason, one thing is becoming clear: if Saudi Arabia is unable to stem the reserve bleeding with oil in the critical $50-60 zone, any further declines in oil would have dire consequences on Saudi government finances. In fact, according to a presentation by Sushant Gupta of Wood Mackenzie, despite the extension of the...

Full article: http://peakoil.com/publicpolicy/petrodollar-system-in-tro...

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