[EdwinSm]

In an article on oil prices falling before the OPEC meeting the BBC had the following graph :

http://www.bbc.com/news/business-30211564

It seems a lot of countries are in trouble, having promised their citizen more than they can earn in oil exports. These include Saudi Arabia. For me this indicates that the risk of civil unrest as governments are forced to cut back their spending. Civil unrest would likely cut oil supplies.

So will we see a decreasing amount of oil coming earlier than just depletion of fields would indicate?

[Tanada]

KSA is the main driver of the current price declines so either the graph is way off or they have the cash reserves needed to destroy the USA fracking industry and then drive the price back up afterwards.

[Islander]

Saudi Arabia has massive cash reserves to fall back on, so do the other gulf states. Countries like Nigeria, Venezuela and Iran on the other hand don't have much cash in reserve so they are quite screwed, especially Venezuela as they were heading towards total collapse in the first place because of their socialist polices.

[ROCKMAN]

Islander - Exactly. The KSA budget is determined by their income and not based on what the must spend. Their budget just 5 years ago was only 35% of their current budget plans. And that's because their oil revenue was less. But the average price in 2005 was $55/bbl. This is the first year the KSA will have a balanced budget since 2005. Since then the KSA has had huge budget surpluses. Which is why they haven't had to cut budgets...yet. How long can they handle the lower price? Time will tell. But remember a huge chunk of the KSA budget has been going towards major oil/NG development projects. Projects they can easily delay. And just 10 years ago the KSA gov't had no trouble being the Big Daddy for its citizens when oil was selling for less the half of the current low price.

But that's the KSA. As you've pointed out the other oil exporters won't be as capable of handling lower prices.

[AndyA]

This is mostly msm bullshit. Countries with floating currencies see a decline in their currency, boosting the value of their exports and the revenue impact is very low. This simple fact seems to escape nearly everyone. Add in the fact that globally many countries are actively engaged in devaluing their currency for this very reason, it's very hard to find any basis for calculating national budget needs based on a USD price of oil.

Countries with high external debt denominated in USD will assuredly feel the pinch, but those are few and far between among oil exporters.

I wouldn't even include Libya in that list since it is now a failed state with no government, various regions controlled by various warlords.

Another point worth mentioning is that there are many countries with far less in the way of 'money good collateral' running high deficits for social and military spending.

[Quinny]

Sure Goldman Sachs and it's subsidiary the Fed will be willing to step in and help!

[Peak_Yeast]

I am not sure I understand that list.

How can countries budget with oil prices far above what the price has been historically (except for the 2008 peak)?

I didnt know that national budgets just are wishful dreams without any reality in them.

[ROCKMAN]

PY - "How can countries budget with oil prices far above what the price has been historically (except for the 2008 peak". You man like how a lot of folks can acquire credit card debt when they know they can barely budget enough money to cover the minimum interest payment let alone pay off any of the principal?

And while you're at it you might also ask how the US govt can create budgets year after year when they know for certain it won't have enough income to cover those budgets and will have to borrow $trillions over time to make up for those deficits.