The battle for market share goes on but now the signs are emerging that low prices are starting to bite
The low price of oil has been squeezing producing countries for some time now. Smaller producers always bear the brunt of modest price falls to their finances but they've been hit very hard with the collapse of oil. Larger producers are better placed to see out the storm and are more prepared to wear some short term pain for the supposed long term gain
Saudi Arabia is one country near the top of the pack of those who can ride this out so that they and OPEC keep and increase their market share
That is until the cracks in their finances start to appear. The Saudi finance ministry has just ordered government departments not to enter into contracts for any new projects and to hold off appointments and promotions in Q4. They've banned purchases of vehicles, furniture, and new property rentals, while asking collectors to get busy collecting oil revenues. The moves have been put down to the completion of a spending review that was initiated back in August but that smells of a smokescreen to me
Governments are always at one or t'other end of the spending scale. They are either flush and always looking at ways to spunk it up the wall, or they're skint and cost cutting
I don't dare say that the Saudi's are in any real trouble but if they do start to feel the financial heat, that's going to bring talk of changes to get the oil price back up. Those shouts are persistent in the smaller producers who are going through the ringer already so if it starts coming from the Saudi's then the price of oil is going to fly
It's always worth keeping your ears to the ground for stories like this as if you see signs of something developing early it gives you a chance to get in an early trade
