Original by Aleksandr Rodzhers published by Zhurnalistskaya Pravda; translated from Russian by J.Hawk
Every time I am told by Western propaganda (including Ukrainian or Russian liberal media which are their echoes) tells me that “Russia is a giant gas station,” I smile and think about Norway or Saudi Arabia.
In both of these countries, revenues from hydrocarbon sales are a most important component of the state budget but also the foundation of the national economy. While in Russia the extraction, processing, and sale of hydrocarbons represents 16% of the GDP, in Norway it exceeds 50% and in Saudi Arabia it is close to 80%.
This is why Ukrainian russophobes who have spent years screaming about how “Rashka will collapse” are now panicking. Because Russian oligarchs are taking advantage of the current market situation (namely relatively low price of oil company shares) to actively buy up Norwegian oil and gas firms.
However, right now I’d prefer to talk not about Norway bout about Saudi Arabia, whose role in the global oil dumping is far more significant.
The situation in Saudi Arabia is far from good. It is experiencing a budget deficit for the first time in six years. The government was forced cut many budget items, reduce its foreign assets by $82 billion, and increase its national debt by $15 billion
Moreover, Saudi Arabia’s business activity is dropping. Subcontractors on government contracts haven’t been paid for many months and many construction projects have been frozen.
This is occurring in spite of the sharp increase in the volume of extracted oil. June saw the 25 year peak extraction–ten and a half million barrels in a single day. Extraction is growing, but exports are falling (in August it fell to only 7 million barrels a day). The slowing global economy means doesn’t need that amount of oil, no matter how much of it is being dumped. The stored oil reserves have increased to 326 million barrels of oil which can’t find customers, which is also a 14 year record.
Moreover, all of this is happening against the backdrop of the Saudi invasion of Yemen, their support for the Islamic State and the undeclared civil war in Saudi Arabia itself.
As we can see, the Saudi tactic of limitless oil dumping in order to depress the price of oil turned out to be a failure. Therefore the question who can hold out longer, the quite diversified Russian economy or the almost wholly oil-based Saudi economy does not have, as people like to say these days, an unambiguous answer.