Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Since the Kingdom 'bought out' the Seven Sisters Aramco has effectively been nationalized. The company is a the primary source of revenue to the Saudi government. But having interest free money from commodity fund managers would have allowed more of the cash from oil sales to go into the sovereign wealth fund, and it is out of that fund that Saudi Arabia is financing the shortfalls that occur from the current drop in oil prices, for which they seem particularly responsible. The question goes to Saudi motives.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Jan 3rd, 2015 at 12:07:38 PM EST
[ Parent ]
As I have often pointed out over the years, if the history of commodity markets tells us anything it is that if commodity producers can extract resource rents with other people's money, then they will.

It's just that the Saudis - with a little help from their friends - have done it on a scale orders of magnitude greater than anyone in market history.

The ten year duration of this macro manipulation is not unprecedented. The International Tin Council cartel operated from 1956 until the Tin Crisis of 1985, while Yasuo Hamanaka manipulated copper for Sumitomo for five years before David Threlkeld blew the whistle and even then for another five years until the regulators finally woke up.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Jan 3rd, 2015 at 02:29:21 PM EST
[ Parent ]


Top Diaries

Occasional Series