Published on 27 December 2014, by M. Tomazy.
Saudi Arabia will suffer from a $39 billion deficit of the government's budget in 2015. The reason related to the accelerated crude oil production, and the subsequent reduction in oil prices.
However, Saudi oil minister Ali al-Naimi announced that the kingdom will not reduce oil output, even the barrel's price would touch the $20. Al-Naimi said: "it is not in the interest of OPEC producers to cut their production, whatever the price is,"..."Whether it goes down to $20, $40, $50, $60, it is irrelevant"
A worthy question rises here: why does the Saudi Arabian regime insist on accelerated oil production despite budget deficit?
Russian president Putin suggested that a U.S.-Saudi 'conspiracy' to flood oil market "not ruled out".
Western governments started an economic sanctions against Russia after the Western-Russian dispute on the Ukrainian crisis, particularly when the Russians annexed Crimea to their country. Moreover, Russia strongly supports the Syrian regime against the US-Saudi backed rebels. In fact, Russians support the Syrian regime on two levels; they supply Russian-made arms, and beside China, they kept stable 'political stances' in the UN Security Council.
On the other hand, Saudi Arabia is highly concerned about the Iranian influence in the middle east. Russia, Saudi Arabia and Iran are among the world's top oil producers.
However, Saudi oil minister Ali al-Naimi announced that the kingdom will not reduce oil output, even the barrel's price would touch the $20. Al-Naimi said: "it is not in the interest of OPEC producers to cut their production, whatever the price is,"..."Whether it goes down to $20, $40, $50, $60, it is irrelevant"
A worthy question rises here: why does the Saudi Arabian regime insist on accelerated oil production despite budget deficit?
Russian president Putin suggested that a U.S.-Saudi 'conspiracy' to flood oil market "not ruled out".
Western governments started an economic sanctions against Russia after the Western-Russian dispute on the Ukrainian crisis, particularly when the Russians annexed Crimea to their country. Moreover, Russia strongly supports the Syrian regime against the US-Saudi backed rebels. In fact, Russians support the Syrian regime on two levels; they supply Russian-made arms, and beside China, they kept stable 'political stances' in the UN Security Council.
On the other hand, Saudi Arabia is highly concerned about the Iranian influence in the middle east. Russia, Saudi Arabia and Iran are among the world's top oil producers.
The Saudi-US plan:
The plan is basically to "flood" the crude oil market and subsequently increase economic pressure on Russia and Iran, which would undergo economic downturn, side-by-side with the Western sanctions on both countries. This will push them to change their foreign policy.
"Sanctions are working as intended in putting enormous pressure and strain on the Russian economy," Obama said.
Low oil prices to affect Iran more than sanctions. "Iran may be forced to charge more for domestic sales of oil, which would anger much of the middle class as they have been squeezed by years of economic mismanagement and Western sanctions." said Justin Dargin, Middle East energy expert from Oxford University.
On other hand, U.S. stocks are expected to climb in 2015 as concerns about the prospect of a Federal Reserve interest-rate hike are being offset by hopes for strong consumer spending as oil prices fall, according to a Reuters poll.
The Saudi motives and consequences:
The Saudi foreign policy is greatly influenced by personal relations. A bunch of princes beside their Western counselors are engineering the Kingdom's policy.
There are no independent research centers or state institutions to draw the country's strategic planning.
For the Saudi regime, the current priority is to restrict the growing Iranian influence in the middle east. So far, Iran has increasing influence in Yemen (Saudi neighboring country), as well as in Syria, Lebanon, Palestine and Bahrain.
On other hand, the Saudi economy has been affected. "In a sign of mounting financial pressure, the Finance Ministry said the government would try to cut back on salaries, wages and allowances, which "contribute to about 50 per cent of total budgeted expenditures"", AP reported.
"The kingdom's figures for the current fiscal year show a deficit - for the first time since 2009 - of $14.4 billion. Total expenditure had been projected at $228 billion, but ran 29 per cent higher, at $293 billion, because of expansion work at Islam's two holiest mosques, among other projects, the Finance Ministry said."
"Saudi Arabia feeling pain of oil price plunge, but it has enough currency reserve to last for years", according to International Business Times.
