I am sure that by now, many readers are aware of the rock bottom oil prices and concerns of a looming global recession.

Oil producing countries like Russia, Iran, Nigeria and Venezuela with high oil production costs and major economic dependency on oil exports have been badly hit.

In Canada, the effects are job losses and slower economic growth. U.S strength in varied sectors has softened the economic impact of low oil prices.

Oil importers, particularly the emerging economies share the joy of low oil prices with the myriad individual oil consumers and oil-consuming industries. Oxford Economics and IMF estimate that falling oil prices are offset by global growth.

Saudi Arabia is determined to maintain current oil prices by not reducing their oil output, by relying on their large cash reserves. However, since the cash reserves are not the equivalent of the proverbial “Goose that lays Golden Eggs”, sooner or later Saudi Arabia will be forced to cut-down production and supply, and oil prices will go up again. But this time round other oil-producers will likely have learnt a lesson and would better prepared not to let a future repeat performance happen by putting their “innovation shoes on” and have more cost-effective techniques and equipment in place for cheaper oil production.

Saudi Arabia FOREX reserves

Bibliography

Critchlow, Andrew. “Oil Price Slump to Trigger New US Debt Default Crisis as OPEC Waits.” The Telegraph, 14 Nov. 2014. Web. 02 Oct. 2015.

Giles, Chris. “Winners and Losers of the Oil Plunge.” The Big Read (Financial Times). Financial Times, 15 Dec. 2014. Web. 04 Oct. 2015.

Harrison, Virginia. “Canada Slips into Recession as Oil Slump Bites.” CNNMoney. Cable News Network, 01 Sept. 2015. Web. 04 Oct. 2015.

Shenk, Mark. “Oil Bulls Lose Faith in Recovery as Russia Adds to Global Glut.” Bloomberg.com. Bloomberg, 02 Oct. 2015. Web. 04 Oct. 2015.

Solomon, Jesse. “These Countries Are Getting Killed by Cheap Oil Prices.” CNNMoney. Cable News Network, 30 Oct. 2014. Web. 02 Oct. 2015.

“Sheikhs v Shale.” The Economist, 06 Dec. 2014. Web. 04 Oct. 2015.

“The Sticky Superpower.” The Economist. The Economist Newspaper, 03 Oct. 2015. Web. 04 Oct. 2015.

Images

Breakeven Prices. Digital image. The Economist, n.d. Web.

Saudi Arabia Foreign Exchange Reserves. Digital image. Trading Economics, n.d. Web.