censoo.com: Saudi Arabia is the biggest oil exporter in the world. However, this status may be threatened as a result of domestic oil consumption. Several recent studies predict that Saudi Arabia will be a net oil importer by 2030 or 2038. Other regional energy exporters such as the United Arab Emirates, Kuwait, and Iran have worked to control their domestic consumption to address the skyrocketing costs, economic distortions, and potential vulnerabilities of high rates of internal energy utilization. The current efforts of Saudi Arabia to curb domestic consumption offer an excellent litmus test for its neighbors, as well as other oil and gas exporting countries.
Another potential oil crisis in the Middle East Source:censoo.com
EXPATVINE: Saudi Arabia’s economy is depressing due to a dramatic decline in oil prices. Unemployment, rising prices and overt dependence on migrant worker seems to be the root cause of economic turbulence.
GDP growth has slowed significantly while debt to GDP has soared relative to prior years. And Riyal forwards have plunged as bets on devaluation soar (despite government bans). Source: Oil Price
Generally, the nation shall witness a massive decline i.e 2.5 million foreigners by end of 2018. Unbearably costs of living will financial erode incomes of expats, especially those who have dependents staying with them. Council has also decided to revoke subsidies on fuel, gas, bread, baby-milk, electricity, and medicine.
To promote indigenous professionals, the government shall impose taxes and fees on expats and dependent family. Subsequently, in the year 2019, expats having high-salaries and families with less than 4 members would be allowed to stay.
As a result of this, several industries maybe wounded or completely die due to the aggressive economic measure. Nutrition, Catering and pledges, couriers, airlines, construction companies and car dealership will be on front end of laceration.
Kentucky Fried Chicken Image: iranaware
Private restaurants such as Kentucky’s, Hardee’s, Mc Donald’s and Burger King may have to close due to the depressed economy. At the end of 2019, pre-used cell-phone market is expected to rise as people may not be able to afford new phones.
Saudi women work inside the first all-female call center in the Kingdom’s security sector Source: Saudi Gazette
Women employees in offices, institution, and shops will increase. It will shock the nationals and beginning 2020, they’ll start to recover and adjust to a new face of Saudi. It is stated that many Saudi citizens will have to work in areas that they’ve never worked before.
Female Drivers Can Put Saudis on Road to Enhanced Growth Source: RAND Corporation
The bottom line is, the remedy for the sick economy is Saudization. It may hurt temporarily to both expats and Saudi Nationals, but it is bound to put the economy back on track by 2020. In order to make a sizable living, it seems expats will have to find newer pasture.
(English translation from the article written by Mr. Mohammed Altwairqi)
Economic experts predict that the economic distress experienced by Saudi Arabia due to the decline in world oil prices and the war in Yemen will cause huge changes in the population structure in the Kingdom.
The most important of these are the departure of 2 million plus foreigners by the first quarter of 2018. Reason, they will not be able to cope with the large fees imposed by the Kingdom on their foreign dependents.
Some 2.5 million foreigners are expected to leave by the end of 2018, mostly single-family workers, which will find it difficult to cope with the cost of living, as well as other fees and taxes that the state may seek to impose on them while decreasing subsidies on fuel, electricity, cooking gas, bread, baby milk and medicines.
With the beginning of July 2019 they will remain only in the Kingdom on the determination of some foreigners with high salaries and families of not more than four members.
Of course, this reverse migration will be affected by several commercial sectors in the Kingdom of Saudi Arabia, the first of which are the companies of nutrition, catering and pledges, some of which may collapse completely if they cannot withstand the economic shock in the first two years (2017-2018).
The impact from the first half of 2018 will impact the real estate market and rents are expected to fall to 50% from what they are now or even less, followed by couriers, airlines, construction companies and car dealerships.
The impact of the economic situation will not only be limited to foreign expatriates but will extend to the Saudi families themselves, who will seek to transfer their children from private schools to public schools to reduce costs, find cheaper housing with less advantages, or move from villas to apartments.
There will also be a pile of new vehicles in the agencies, the used car market will rebound and prices will fall too much.
The impact of the crisis at the end of 2018 will extend to the electronics, smartphones, tablets, computers, luxury, service, maintenance and operation sectors. Hundreds of companies and institutions will be forced to withdraw from the market and close.
This will lead to an increase in the pace of foreigners departing and ending their contracts. Once to separate the Saudis from their jobs in order to reduce the cost.
At the beginning of 2019, foreigners will not be able to afford high electricity, water and gasoline bills, as these will be subsidized only for Saudi citizens.
Foreigners will look for exits and solutions such as renting homes with Saudis or transferring their cars to citizens.
Dozens and perhaps hundreds of branches of foreign food chains, private restaurants such as Kentucky, Hardee’s, McDonald’s and many other activities and shops will be closed with depressed markets and few customers.
By the end of 2019, it is expected that the number of pre-used cellphones will increase, as people will not be able to afford buying new and the proportion of Saudi women working in offices, institutions and shops will increase.
The people will begin to partially adjust to the situation by the beginning of 2020 and the Saudis will have to work a lot in areas and activities they have never worked in before.
There will be a huge gap between the market and the consumer, and will rid the ways of the Kingdom’s population of cars and other products. And by the middle of the same year 2020 the economy will begin to recover but very slowly and the presence, number of companies and institutions will be lost!
Expats must start now carefully prioritizing their priorities.
In an article dated August 7, 2015 entitled “Saudi Arabia faces existential crisis after its misjudged gamble on oil” posted in FINANCIAL POST, Ambrose Evans Pritchard said that it is too late for OPEC to stop the shale revolution. The cartel faces the prospect of surging U.S. output whenever oil prices rise.
If the oil futures market is correct, Saudi Arabia will run into trouble within two years. It will be in existential crisis by the end of the decade.
After slashing spending by US$180 billion to deal with one of the worst industry downturns in decades, oil companies are still bleeding cash and slipping further into debt to maintain dividends to shareholders.
The contract price of U.S. crude for delivery in December 2020 is currently US$62.05, implying a drastic change in the economic landscape for the Middle East and petro-states.
The Saudis took a huge gamble last November, 2015 when they stopped supporting prices and opted instead to flood the market to drive out rivals, boosting output to 10.6m barrels a day (b/d) into the teeth of the downturn. Bank of America says the Organization of the Petroleum Exporting Countries (OPEC) is now “effectively dissolved.”
If the aim was to choke the U.S. shale industry, the Saudis have misjudged badly.
“It is becoming apparent that non-OPEC producers are not as responsive to low oil prices as had been thought, at least in the short run,” said the Saudi central bank in its latest stability report.
One Saudi expert was more blunt. “The policy hasn’t worked and it will never work,” he said.
By causing the oil price to crash, the Saudis and their Gulf allies have certainly killed off prospects for a raft of high-cost ventures in the Arctic, the Gulf of Mexico, the waters of the mid-Atlantic and the Canadian oil sands.
Consultants Wood Mackenzie said the major oil and gas companies have shelved 46 large projects, deferring US$200 billion of investments.
The policy hasn’t worked and it will never work
The problem for the Saudis is that U.S. shale frackers are not high cost. They are mostly mid cost, and as I reported from the CERAWeek energy forum in Houston in April, experts at IHS think shale companies may be able to shave those costs by 45 per cent this year — and not only by switching tactically to high-yielding wells.
Advanced pad drilling techniques allow frackers to launch five or 10 wells from the same site. Smart drill-bits with computer chips can seek out cracks in the rock.
“We’ve driven down drilling costs by 50 per cent, and we can see another 30 per cent ahead,” said John Hess, head of the Hess Corporation.
The North American rig count has dropped to 664 from 1,608 in October, but U.S. output rose to a 43-year high of 9.6 million b/d in June. It has only just begun to roll over. “The freight train of North American tight oil has just kept on coming,” said Rex Tillerson, head of Exxon Mobil.
On November 14,2017, The Economist Explains shared an article about Saudi Arabia’s crown Prince Muhammad bin Salman has become very powerful so quickly.
President Donald Trump is addressing the arrests of prominent Saudi royals and business leaders ordered by a committee headed by Crown Prince Mohammad Bin Salman. Source: wavy.com
SAUDI ARABIA has rounded up so many top officials that it is running out of space at the Ritz-Carlton in which to jail them. Since November 4th more than 200 princes, ministers and businessmen have been detained. A rather more quotidian Marriott has been commandeered to house the overflow. Billed as an anti-corruption sweep, the jailing also feels unmistakably like a purge of political foes.
Other dramatic changes are also under way as the country pushes forwards with major economic and cultural reforms. Cinemas may soon be opened for the first time in decades, as will new tourist facilities. Saudi Arabia wants to build a high-tech $500bn economic zone on its north-west coast. At the centre of all these changes is Muhammad bin Salman (widely known as MBS), the young crown prince poised to become Saudi Arabia’s strongest ruler in decades. How did he amass so much influence?
King Abdel-Aziz, the founder of the modern Saudi state, had dozens of male heirs. To reduce rivalries in his sprawling family, he established a horizontal line of succession, with power passing from one son to the next. One, King Saud, was deposed in 1964, partly over fears that he wanted his own son to succeed him. Other royals carved out fiefs: one prince oversaw the army, another the foreign ministry. But the sons of King Abdel-Aziz have aged. The youngest is now in his 70s. The current king, Salman, is fading.
King Salman of Saudi Arabia Image: Daily Pakistan
The gerontocracy has struggled with the task of running a modern, youthful state, where 59% of the 20m citizens are under 30. King Salman started to address this in 2015 by naming a member of the younger generation—his nephew, Muhammad bin Nayef—as crown prince. He lasted just two years in the role.
Saudi Crown Prince and Interior Minister Prince Mohammed bin Nayef Image: News.com.au
King Salman cast him aside in June and replaced him with his favoured son, Muhammad bin Salman. This marked the first time a Saudi monarch had officially tried a dynastic transfer of power.
King of Saudi Arabia Faisal bin Abdulaziz Al Saud is shot point-blank and killed by his half-brother’s 28-year-old son Faisal bin Musaid at the age of 69 in Riyāḍ, Manţiqat ar Riyāḍ, Saudi Arabia. Source: birthfactdeathcalendar.net Image: Pinterest
Crown Prince of Saudi Arabia Image : Al-Masdar News
Al-Masdar News: The House of Saud and their rising star Crown Prince Mohammed bin Salman are not oblivious to global opinions. An extremely strict Wahabbi Sharia Law system, a bloody military intervention in Yemen, and the Machiavellian rise of the Crown Prince to power are only a few things souring the Saudi standing in the eyes of the world. The on going crisis in Yemen makes the future look quite bleak, however, the ambitious Crown Prince is attempting to shift focus toward grand visions he wants to accomplish by the year 2030.
One of the most controversial ideas envisioned by the Crown Prince is a shift towards moderate Islam. Saudi Arabia has already taken a step in that direction by recently allowing women the right to drive and gradually stripping most power from the infamous Mutaween religious police force. He also plans to build a futuristic transnational mega-city near the Gulf of Aqaba called NEOM, begin issuing tourist visas to foreigners, and even construct a string of beach resorts where women are allowed to wear bikinis. To help fund this, the Crown Prince plans to sell 5% of the state-owned trillion dollar Aramco oil company to international investors.
All of these ideas seem as if they are a step in the right direction. However, the Kingdom could be jumping out of the frying pan and into the fire. These plans alienate the hard-line Wahabbi clerics who wield significant power and influence in the country. On top of this, Saudi Arabia has already been alienating their oppressed Shiite minority. The sectarian tensions have escalated with the recent siege of the predominantly Shiite city of Awamiyah, where 20,000 civilians have been forced to flee their homes. While external missiles and border clashes near Yemen are proving to be a massive headache for the monarchy, the potential internal conflicts may pose the greatest threat to the House of Saud.
Al-Masdar News: The Coming Crisis in the Kingdom of Saudi Arabia
The Kingdom of Saudi Arabia has, in recent months, tightened their blockade on the war ravaged country of Yemen. The justification for this tightening was the launch of a long range ballistic missile by Houthi rebels towards the capital city of Riyadh in November. Despite these heavy handed tactics in Yemen which have been criticized by the UN, EU, and multiple humanitarian organizations, the Kingdom has made a desperate attempt to improve their international image in the past year. US President Donald Trump, although supportive of the intervention, recently made a statement urging Saudi Arabia to end their blockade and allow humanitarian aid into Yemen. As the power within the monarchy shifts, international conflict escalates, internal tensions rise, and the desperate need for economic diversification looms overhead, how will the House of Saud handle the inevitable rough waters ahead?
The failure of the Patriot Defense System will surely cast doubt upon the defense capabilities of other countries that rely on it, such as Israel, South Korea, Japan, and Germany. At the same time, this will embolden their enemies, such as North Korea and the Houthis, to further develop their own missile program in order to exploit this weakness. So far, the conflict has mostly impacted the Saudi border regions, in particular the areas around Najran. However, as the Houthis continue to demonstrate the long range capabilities of their missiles, nobody in the country will feel safe and the situation will likely continue to escalate.
The Humanitarian Crisis
As with Syria, Libya, Afghanistan, and Iraq, the Yemen conflict has devolved into a prolonged bloody conflict. The Saudi-led intervention has created a humanitarian crisis on an unprecedented scale. According to the World Health Organization (WHO) in their October update, there have been a total of 922,704 cases of cholera including 2317 related deaths in the period of only a year. Famine also looms on the horizon for the war-torn country. Yemen relies on imports for 90% of their food, meaning that a continued blockade would result in mass starvation.
This humanitarian crisis is due to Saudi Arabia destroying Yemeni infrastructure with constant bombing, and is exacerbated by the aforementioned blockade. Aid organizations are in desperate need not only food, but also fuel to distribute their aid. Last week, eight UN leaders called on Saudi Arabia to fully lift the blockade as the only way to avoid a total collapse and a massive humanitarian tragedy that will potentially cost millions of lives.
The situation has become so dire that President Trump has recently called on his Saudi allies to end the blockade. However, if the Saudis do not react swiftly and effectively enough to these pleadings, a mass famine is inevitable. Even if such a crisis is prevented, the mass cholera epidemic and botched intervention have already left an inevitable black spot upon the reputation of the House of Saud, regardless of how successful their plans for 2030 are.
Royalty at Risk
The House of Saud finds itself in a difficult position at the moment. Inaction and maintaining their comfortable status quo will lead to economic collapse in the event of an oil crash, as well as being overshadowed by rival powers such as Iran. Taking action, on the other hand, may diversify their economy and thrust them into a position of global leadership, but will also strain social tensions within the country and lead to devastating military conflicts abroad. Although the royal family has ambitious dreams for the year 2030, their kingdom may wind up facing a nightmare instead.
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