Raymond James Energy Stat of the Week
by J. Marshall Adkins

Energy Stat: Can Saudi Live With $50 Oil Forever?.... and Will Aramco Really Go Public in 2018?
October 16, 2017

As the oil market awaits OPEC's upcoming decision on whether to extend production cuts for a second time (beyond March 2018), the fact of the matter is that this decision will largely be made by two countries, one of which is not even in OPEC. The interplay of Saudi-Russian relations represents a major pivot point for oil. But Saudi influences on the oil market are not limited to short-term output decisions. Other variables include (1) the extent to which Saudi seems to be experiencing problems with oilfield productivity; (2) how the government is planning for long-term oil prices vis-à-vis its economic diversification strategy; (3) the long-standing geopolitical strife with Iran; and (4) the highly anticipated but delayed IPO of Saudi Aramco.

Last week, we hosted an investor call covering all of these topics with Prem Kumar, a former senior White House official on the National Security Council and currently a Mid-East expert at the Washington-based strategic advisory firm Albright Stonebridge Group. In this Stat, we will build on our takeaways from this discussion with our own inferences and interpretations about what to expect from Saudi in the years ahead.

This is a summary of a much more detailed commentary. Please contact your financial advisor for the full report.

There is no assurance any of the trends mentioned will continue in the future. Past performance is not indicative of future results. Investing involves risk and investors may incur a profit or a loss. Specific sector investing can be subject to different and greater risks than more diversified investments. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only form a small part of a diversified portfolio. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

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