Sour Oil – Are the wheels coming off Dubai?
Momentum in the spendthrift emirate certainly looks to be grinding to a halt. Last week, Dubai received a $15 billion (Rs70,350 crore) bailout from Abu Dhabi, its cash-rich big sister. At least that’s how the lending facility set up by the United Arab Emirates (UAE) central bank is being privately interpreted. It’s just one of a number of warning signs.
Signs Of Coming?
Saudi Arabia started accessing debt in 1980’s due to low oil prices – to pay the bill for a ‘welfare state’! Since then that debt has been reduced significantly – it still stands at US$62 billion.
Most oil producing countries, are now living at the edge. As India’s new oil discoveries come on line from 2009, China’s post-Olympics appetite for oil reduces, a recessionary US cuts down on oil consumption, a stagnant EU damps on oil – what happens to these oil producing countries!!
With the dollar hegemony at risk, what happens to their dollar reserves?