Friday, January 2, 2015
Saudi Arabia needs an Oil Price of around $80
REGAN: Do you think to a certain extent – and I actually wrote about – I wrote about this in – in my column in USA Today this week. I wonder to what extent, Marc, OPEC actually enjoys seeing lower prices right now because of the success of drilling in the US. In other words, it makes it far less attractive for drillers in the US to be investing in that sector.
FABER: Except too much of a good thing may not be very good for Saudi Arabia and the other oil producers. You can extract oil in Saudi Arabia at very low cost, but you have to understand the population of Saudi Arabia has now reached I think 25 million. So the social cost is very large. They need an oil price of around $80. If oil prices went down – and let me remind you oil hit a high in July 2008 at $147 and within six months it dropped to $32, but it didn’t stay there. It rebounded. And I think Saudi Arabia and most oil producers would be in trouble if the oil price went below $70 and stayed there.
Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.