The Saudis would prefer to see triple-digit oil here to stay, The Financial Times reports:
Ali Naimi, the powerful Saudi oil minister, said the world’s largest oil producer aimed to “stabilize” oil prices slightly below the current level of $111 a barrel.
“Our wish and hope is we can stabilise this oil price and keep it at a level around $100”, Mr Naimi told CNN television. “If we were able as producers and consumers to average $100 I think the world economy would be in better shape.”
And they need it, just to balance the budget…a popular trend amongst oil dependent sovereigns:
The Institute of International Finance, a leading banking group, estimates that the break-even oil price the kingdom requires to balance its budget will jump from $68 last year to $110 in 2015. Only a decade ago Saudi Arabia was able to balance its budget with oil prices averaging $20-$25. In spite of high oil prices and production, Saudi Arabia has suffered a fiscal deficit for the last three years in a row.
Brent crude closed Friday at $109.86. Since running up for much of 2010, buoyed by QE2, brent crude has since settled down – ironically in tandem with Bernanke’s printing presses!
If QE resumes again next year (and it is an election year, after all), then brent crude may soar above the Kingdom’s targets. Until then, it may have trouble holding the triple-digit line.