Oil states burn billions as global axis of power shifts

Saudi Arabia is burning through its foreign reserves at an unprecedented rate as it struggle to cope with plummeting oil prices and the soaring coasts.
The price of oil sank to below $50 a barrel last week, the lowest in six years, draining Gulf states of their spending power – but hitting Russia and other producers harder still. Venezuela and Nigeria face bankruptcy and there are fears that the collapse in the oil price could trigger a seismic shift in the global balance of power.
Saudi Arabia took $2 billion a week out of its foreign reserves between the end of September 2014 and June 2015, with King Salman, who came to power in January unleashing an intensive military onslaught against Iranian – backed Houthi rebels in Yemen and funneling arms to opponents of President Assad in Syria, Saudi Arabia’s monetary agency put its foreign reserves at $672 billion at the end of June, down from $746 billion in September 2014.
“It’s coming down fast,” David Butter, an energy expert at the Chatham House think tank, said. Evidence of that, he said, was Saudi Arabia’s decision to borrow $5 billion in the sovereign bond market last week, the first time in eight years it has had to do that.
The world’s top oil exporter and the de facto leader of the 12-nation Organisation of Oil Exporting Countries (OPEC) cartel, Saudi Arabia has shown in the past that it is prepared to use oil money to quell social unrest. It was able to nip Arab Spring protest in the bud by paying off demonstrators and spending $130 billion to raise salaries and boost social spending.




For the full story, check The Nation newspaper.










































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