According to Reuters, Saudi Arabia is in the market for a bank loan of $6-8 billion. It isn’t a massive sum by Riyadh’s standards, but as the first significant foreign borrowing in a decade, it is a sign of the price the oil war is extracting. With a budget deficit that touched $100 billion last year and bond issues starting to hit liquidity, the kingdom is starting to feel the heat. Sure, it still has net foreign assets of $600 billion to fall back upon, but the US shale industry—a primary target of Riyadh’s strategy of playing rope-a-dope with low oil prices to drive out marginal producers—is proving stubborn.
Meanwhile, European markets did their yo-yo impression and lifted on the back of oil prices rising above $40 a barrel on Wednesday. The reason for the latter—speculation that the largest oil exporters could soon agree to freeze production. But there is a large difference between a freeze and a cut. It remains to be seen who will blink first in this high stakes game of chicken.