Saudi Arabia and Its Failed Oil Price War
Table of Content
About Saudi Arabia and its failed oil prices
With 34 million, Saudi Arabia, more than seven million live in Riyadh’s capital. It is the 14th largest country globally. Approximately two million square kilometres of land area are covered by it. This makes it the second-largest (OPEC) Organization of petroleum exporting countries. Among all the other member countries. Saudi Arabia was the first country to encounter oil. It did so in March 1938 at 1,440 meters below Dammam oilfield’s ground level.
Information About 2019 Oil Trading
According to the 2019 data submitted by the country 46,949 million barrels a day were proven crude oil reserves
Production of crude oil was 9, 808.2 (1000 barrels per day).
Demand for the oil was 2,586.1 (1000 barrels a day).
The total products from petroleum exported are 7,038.1 (1000 barrels per day).
The total output that was made from petroleum products is 2,896.0 (1000 barrels per day).
Proven natural gas reserves were 258,600 billion cubic meters.
The value of petroleum exports was 202,370 million dollars.
GDP per capita of 23,174 dollars.
The total crude oil that was exported is 3,199.1 that makeup to 1000 barrels per day.
Insight about oil trading
Oil futures are contracts in which you have to agree to exchange a set and fixed amount of oil. At a fixed price on a fixed date set by the oil traders and buyers. Oil trading gets done based on a crude oil futures exchange. Oil futures are considered to be the best method for trading oil. As in the future, the oil value goes up or down, so will oil futures prices.
Ways of Oil Trading
There are three ways of oil trading that are quite effective and meaningful to apply:
Fundamental analysis
For this, you will need the proper exchange use. For the oil gauge, you wish to get traded with. The trade is undertaken in a professional manner instead of on an individual level. A trader needs to understand the fundamental oil supply and demand factors. Crude oil prices in the trading sector are also affected by it. One can look for fundamental analysis. Into the deep knowledge of core mathematics behind oil industry trading and manufacturing.
Technical analysis
The traders should use the exact equipment and techniques. To manufacture the best quality crude oil from the oil fields and reserves.
Risk management
In this factor, the probability skill is the one to work. Do not get into the business, which is not your piece of bread. There is a risk when it comes to involvement in this sector of business. Saudi Arabia is in the hands of itself, making it through its hard times. The management of risk is the phase they are going through.
Advantages of oil trading in Saudi Arabia
Here are the advantages of oil trading in Saudi Arabia. Also information about Saudi Arabia and its failed oil prices.
Cheap
Saudi Arabia has the cheapest production method of oil in their country. Cheaper than any other nation in the World that is the major oil-producing country. They have methods that are less expensive and hence make it an efficient process to conduct.
Main trade
The country does not have any other comparative economic activity. That can get mentioned or combat this production area. Hence people of Saudi Arabia are good at it due to the only focus they have got.
Reserves get concentrated here
In Saudi Arabia, around 17% of the World’s proven petroleum reserves get discovered to date. The oil and gas sector covers about 50% of the gross domestic product. 70% of oil exports earnings belong to the oil and gas sector.
Rich in oil
The country not only produces a good amount of oil but is also home to many oil-rich fields. The Ghawar field in Saudi Arabia is the World’s largest oil field. The two chief producing members C and D of the Arab formation, have a thickness of about 30 meters and 80 meters or more, respectively, and a good porosity of 20%.
Major importer or exporter
Saudi Arabia is the major exporter and importer with absolute and determined due to the only presence of oil production. The country has only a margin and profit because of the only trading way and path. There are no other means of profit or margin.
Disadvantages of oil trading in Saudi Arabia
There are only oil production and crude oil reserves in the country. Which directly affects the country because it has no other production means.
Due to the high production of oil and natural gases, this country creates a lot of pollution. This country burns a lot of products generated by oil production and its trading.
The country contributes to the greenhouse effect and climatic changes, which pollute the air. The country has poor air quality due to the huge amount of carbon dioxide gas produced by oil burns and its waste.
The oil is imported in bulk from other countries and nations becoming more and more expensive. This is a reduction in reverses, which causes imports to increase. Thus, making oil trading expensive.
Ecological drawbacks
Oil trading has a problem. It is a health risk from the oil and gas extension drilling method of Fracking. Which is known to contaminate water sources with harmful chemicals. Which can lead to diseases like cancer, birth defects, liver damage, cough, eye defects, and most deadly skin cancer.
It is devastating to the water environment. Oil pollution repeatedly spreads on the surface in a very thin layer that stops and blocks oxygen from reaching the plants, animals, aquatic animals, and insects, which is very harmful to them because they live in water.
Oil pollution also affects our environmental life by preventing photosynthesis. Which is the major production of biomass.
Reasons that led to Saudi Arabia and its failed oil prices
It started in the year 2020. The war of economy was triggered in March 2020, which was started by Saudi Arabia in response to Russia’s stimulus. Russia refused to reduce oil production because it wanted to maintain the same moderate price of oil in this production year. By the spring period of 2020, the conflict resulted in a sheer drop in oil prices. The war, which commenced for the first time on 8 March 2020, facilitated a 65% quarterly fall in crude prices. This was the first time for Saudi Arabia and its failed oil prices. US prices fell by 34%, crude oil price by 26%, and Brent crude oil by 24%, during the first week of March.
Drop-In the Price of Crude Oil
This flame spread over more land and increased the conflict breaking up a treaty between the OPEC oil. Amid COVID-19 pandemic Russia over proposed oil production. OPEC’s alliance fell apart as per a firm reason for Russia walking out of this agreement signed by them. Due to the drop in demand for oil, the traders were at a sharp loss of 30% since 2020. A few months later, in early April 2020 and once again in June 2020.
This is how oil production cuts were agreed upon by both Russia and Saudi Arabia. The price of crude dropped so far that it went into negative data and numbers. Saudi Arabia failed and its oil prices were affected in such a way.
Detailed Study of the Country’s Depths
This article about Saudi Arabia and its failed oil prices was a detailed study of the country’s depths. How and why did it all start from Saudi and its trading premises during the 2019 year, and how is it affected right now in 2020. It’s all interconnected and a hustle-bustle around the World. The country has oil trading as the only way of profit and value. It’s not how Saudi Arabia is affected. It’s about the oil trading process and bad production that affect every aspect of trading to the core.
How Trading Can Be Difficult?
Saudi Arabia is a country of Prosperity and includes wealth around the whole nation. It is a country with limited stocks and hence has to import most of the oil barrels. Trading in millions and billions of quantities, it can become difficult sometimes to handle the vast business of trading, importing, and exporting the World. The actual time that Saudi Arabia is passing through is risk and loss, and every business has its ups and downs. It’s the downtime in this country with trade.
Conclusion
The country has suffered a huge loss in GDP and revenue due to the decline in oil production and oil markets distribution leading to the current situation. One thing leads to what has happened in Saudi Arabia, but a series of events unnoticed for a while by everyone who does what happens currently.
References
Disclaimer: This material is a marketing communication and shall not in any case be construed as an investment advice, investment recommendation or presentation of an investment strategy. The marketing communication is prepared without taking into consideration the individual investors personal circumstances, investment experience or current financial situation. Any information contained therein in regardsto past performance or future forecasts does not constitute a reliable indicator of future performance, as circumstances may change over time. Scope Markets shall not accept any responsibility for any losses of investors due to the use and the content of the abovementioned information. Please note that forex trading and trading in other leveraged products involves a significant level of risk and is not suitable for all investors.
