March 24, 2020, 09:01 Text: Eugene Shestak, VZ.RU, unofficial translation
In Saudi Arabia, an "incredible crisis" could ensue if oil prices remain low for several years, says a Bloomberg columnist David Fikling. The ongoing price war in the oil markets will only hasten the coming of the moment when the unstable nature of the Gulf economies will face a 'brutal reckoning' predicts Fickling.
According to him, the collapse of the Saudi economy will occur after 2024, when the country will completely exhaust its financial assets. Fickling maintains that the gold and foreign exchange reserves of the monarchy already make up 0.1% of the gross national product.
Fickling added that if the oil price remains in the range of US$50 to US$55 per barrel, the Saudi Arabia’s gold and foreign exchange reserves will be reduced to about five-month import costs as soon as in 2024. In a few months, the kingdom may find itself in an "incredible crisis" and will have to abolish the fixed dollar exchange rate which has underpinned the global oil trade for a generation.
At the same time, according to the author, this option looks almost optimistic in the current situation.
"The monarchies have surfed a remarkable tide of wealth over the past half-century or so, but every wave eventually crashes. Future generations will never again see the wealth that current subjects enjoy" - concluded the columnist.
Earlier, on March 6, 2020 OPEC+ participants were unable to reach consensus on an oil production agreement. As of April 1, 2020 the transaction will be terminated. Against this background, oil prices began to plummet, followed by stock markets in various countries, including the US, where stock exchange activities even had to be suspended.