Saudi Arabia severs ties with Iran.

By IWMTB19 Go To Postbut Saudi Arabia is a difficult spot now that oil isn't worth anything.

That is misinformed and I wonder where you got that idea. They are actually the ones who drove the price down in order to hurt the competition, the US especially, and to increase the demand in Asia. See Wall Street Journal's reports and about any other newspaper with an economic section.

By Gabyskra Go To PostThat is misinformed and I wonder where you got that idea. They are actually the ones who drove the price down in order to hurt the competition, the US especially, and to increase the demand in Asia. See Wall Street Journal's reports and about any other newspaper with an economic section.

Well they tried to hurt the US....

http://www.wsj.com/articles/the-saudis-gambled-and-texas-won-1441063219

add to that that with the global ban on Iran about to end oil is going to become cheaper. For a while now I feel that Saudi did this to ease the impact of a lot more oil hitting the market due to Iran entering it. So instead of a sudden crash it'll be a more stable lowering of oil prices. Not to mention the ever looming possibility of the green energy revolution becoming cost efficient.

http://www.wsj.com/articles/the-global-battle-for-oil-market-share-1450220940

They drove down the price, but they did it to kill the competition and uhh, that's not happening. Iran refuses to give in and American and Canadian fracking keeps going.

SAUDI Arabians woke to a shock on Tuesday with price rises on petrol and other basic services as authorities slash subsidies in the wake of falling oil prices that have led to a record deficit.

In a clear departure from its decades-old generous welfare system, Riyadh announced prices would rise on fuel, electricity, water and even plane tickets and cigarettes.

Residents of the oil-rich Gulf kingdom have long enjoyed cheap prices on basic goods and services, but officials made clear that was no longer sustainable after the stunning drop in crude prices over the last 18 months.

“We have to rationalise unnecessary spending … This requires changes to focus on essential expenditures,” Finance Minister Ibrahim al-Assaf was quoted as saying Tuesday by the Al-Eqtisadiah newspaper.

After years of high spending, authorities moved swiftly to impose unprecedented cuts after announcing Monday a 2015 budget deficit of $134 billion — the largest in Saudi history and a whopping 15 per cent of Gross Domestic Product (GDP).

http://www.news.com.au/finance/economy/world-economy/saudi-arabia-hikes-price-of-basic-services-due-to-budget-deficit/news-story/ca6989d32ebe88158258f250e41a5690

Saudi Arabia is burning through foreign reserves at an unsustainable rate and may be forced to give up its prized dollar exchange peg as the oil slump drags on, the country’s former reserve chief has warned.

“If anything happens to the riyal exchange peg, the consequences will be dramatic. There will be a serious loss of confidence,” said Khalid Alsweilem, the former head of asset management at the Saudi central bank (SAMA).

“But if the reserves keep going down as they are now, they will not be able to keep the peg,” he told The Telegraph.

http://www.telegraph.co.uk/finance/economics/12071761/Saudi-riyal-in-danger-as-oil-war-escalates.html

Start with Saudi Arabia. The falling price of crude is in part a consequence of its commitment (reiterated by OPEC ministers on December 4th) to produce at full tilt. The idea is to flush out the weaker producers in America’s shale-oil industry and elsewhere. This is proving a costly gambit. Saudi Arabia needs a barrel of oil to fetch around $85 to finance public spending and around $60 to keep its current account in balance. Yet the oil price recently fell below $36, to an 11-year low, before rebounding a little. America has sustained oil production of above 9m barrels a day, despite a sharp fall in the number of oil rigs, suggesting that shale firms are becoming more efficient.

This week Saudi Arabia said that it would cut local subsidies on petrol, electricity and water in order to chip away at a budget deficit that reached 367 billion riyals ($98 billion), or 15% of GDP, in 2015. The Saudis are burning through their (ample) foreign-exchange reserves to pay for imports while maintaining the riyal’s peg with the dollar. But the cost of this strategy has already forced two other oil exporters, Kazakhstan and, more recently, Azerbaijan, to abandon their dollar pegs. The public finances of other big oil producers, such as Russia and Nigeria, are also under pressure. No wonder a devaluation of the riyal this year is a favoured tail-risk for currency forecasters.

http://www.economist.com/news/leaders/21684781-another-year-low-prices-will-create-strains-world-economy-low-and-behold?fsrc=scn/tw/te/pe/ed/lowandbehold