Maduro and Saudi Arabia

As far as I can tell, Nicolás Maduro's two main goals for his extended trip (now at eight days) abroad are to get loans and to convince the Saudis to allow oil prices to rise. He appears to be succeeding in the former but I wonder about the latter.

His statement about his meetings was all platitudes.

"Se están abriendo opciones, puertas, para construir un consenso de una nueva etapa, no estamos hablando solamente de una recuperación circunstancial del mercado y de los precios, estamos hablando de una etapa, que significa la recuperación de los mercados, de los precios, y su estabilización en mediano plazo, para los próximos meses, para los próximos años. De eso se trata, de una nueva etapa de los mercados petroleros", expresó el jefe de Estado en una entrevista concedida vía telefónica a Telesur.

There will be some sort of new era with happiness and stability for all.

What I keep wondering is whether the Saudis care. Latin America doesn't matter to them strategically and I can't think of any reason they have a preference for who is president of Venezuela. As a matter of fact, the Saudis are unhappy about propping up prices for countries like...Venezuela.

Third, there is Saudi Arabia. The kingdom is the driving force behind the drop in prices because it has grown weary of cutting its own oil output in order to prop up prices enjoyed by other countries, both in OPEC and especially outside of OPEC. 

How determined is Saudi Arabia? Very. It is now waiting for low prices to discourage investments in new projects such as Russia’s Arctic, Canada’s oil sands, U.S. shale drilling, and Brazil’s costly sub-salt projects in deep offshore waters. Yes, these are long-term projects that rely on long-term oil prices, but companies still tend to pay a lot of attention to what’s happening now. 

And Saudi Arabia can afford to wait. Even though prices have tumbled, Saudi Arabia – unlike Venezuela – has a large treasure chest of savings from past years and can weather a long period of low prices. The government is assuming a 32 percent drop in oil-related revenues. In addition, Saudi Arabia has some of the world’s lowest production costs, rivaled only by Iraq and some parts of Russia. Production costs in Saudi Arabia are about $4 to $5 a barrel, Naimi said recently.

So Saudi Arabia is intent on waiting this out and they're in a position to do so. That Venezuela has no "large treasure chest of savings" is not their concern, which is bad news for Maduro.