Oil Prices Dropping Less Swiftly Wednesday So Saudis Vow to Keep Huge Budget

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Ibrahim bin Abdulaziz al-Assaf

The U.S. Energy Information Administration warned OPEC members might need to trim their budgets as oil prices continued their steady decline Wednesday, UPI reported.

The global oil price index continued dropping steadily Wednesday, down to $59.16 for the January contract, according to UPI. The Brent prices fell below $60 this week for the first time in at least five years.

But Saudi Arabia’s finance minister Ibrahim bin Abdulaziz al-Assaf declared the Kingdom will continue massive public spending, never mind the 50 percent drop in the price of oil, which is their main source of revenue other than the slave markets and gourds. The 2015 budget will be presented to the cabinet “in the near future, ” the official Saudi Press Agency said.

According to AFP, al-Assaf acknowledged the “challenging” global economic conditions, but was confident Saudi surpluses and reserves built over many years have given his country “depth and a line of defense that come in handy in times of need.”

Good luck there, fellow.

And since the Brent did not slide more than $1 a barrel Wednesday, this was taken as a good omen in most Gulf stock markets, and Reuters reported blue chip banks were pushing Abu Dhabi up sharply, so that country’s index surged 5.1 percent as shares in its three largest banks, First Gulf Bank, National Bank of Abu Dhabi and Abu Dhabi Commercial Bank, surged 11.2, 8.0 and 9.3 percent respectively.

And Saudi Arabia’s bourse was jumping, too, because of the al-Assaf statement.

Reuters cited said Sanyalak Manibhandu, manager of research at NBAD Securities in Abu Dhabi, who suggested Gulf-based investors are hoping those foreigners who were looking to exit the market have left already, and selling pressure will now subside.

Maybe, unless the oil barrel price continues to sink this week. But you’ve heard it here: the Saudis, like anyone out there who’s lost his livelihood just in time for New Year’s Eve, are going to live on their savings. Maybe move in with Mom…

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