Saudi Arabia's Oil Problem

Writing by Sam Denby
Research by Sam Denby and Tristan Purdy
Editing by Alexander Williard
Animation by Josh Sherrington
Sound by Graham Haerther
Thumbnail by Simon Buckmaster

Select footage courtesy Getty and AP; Select imagery courtesy Geolayers; Select music courtesy Epidemic sound

[cssoversimplified]

"Once our oil is finished, we will return to the camel era." Sheikh Al Jabar

[ctrlaltdelmeir]

When oil was cut off from the United States during the 1973 Arab-Israeli War, Henry Kissinger told Faisal "If Saudi Arabia does not lift the boycott, America will come and bomb the oilfields." King Faisal replied back "You are the ones who can't live without oil. You know, we come from the desert, and our ancestors lived on dates and milk and we can easily go back and live like that again." But I don't thnk king Faisal's quote remains true anymore.
I also feel like I have the opportunity to shill the lavon affair

[ntatenarin]

I'm always amazed by how much oil there is. With so many people using it, it feels like we should have drained the Earth years ago.

[jerden]

"Strict but ambiguous" sounds like the worst possible legal system.

[malabo]

This video is a warning sign for oil dependent economies in the emerging market. Since most of these countries don't have all the data to forecast peak oil, Public debt management will be crucial for development otherwise many countries will be even more poor. Diversifying the economy through each nation's particular strength is the key.

[Eastmarch]

May have been worth mentioning that 'Peak Oil' as defined in the 1970s-2000s was an expectation of when Oil would be unable to match production to demand at all rather than a demand drop.

[lukario_cz]

0:32 I'm sure every other comment will point this out, but you switched the two countries. Hijaz was the one controlling Mecca while Nejd was the one based in Riyad

[siangchengpang]

Everyone is being like "HAHAHA OIL PRICE IS HIGH NOW THEREFORE YOUR ENTIRE VIDEO IS INVALID" doesn't realized 1) As mentioned in the video, the oil price is much more volatile than the last century, and there's no reason to believe any peaks would stay that high 2) The entire point of SA expanding their industries is an attempt to lower the reliance on oil, the oil price being high now doesn't mean jackshit, because it won't be high forever AND THAT'S THE POINT 3) higher oil price accelerates the process of countries adapting renewables, which is already planned in EU because of the whole Russian-Ukrainian war, so what caused this spike at the first place might be the downfall of oil in the future

[AnGo]

Speaking of tourism, it's hard to bring foreign tourists in after you have been developing the "Muslims only" image for decades. Even for many Muslims Saudi Arabia is far from being an attractive destination. And finally, the investment we see here is nothing really new when compared to what we have seen in the UAE, Qatar or Bahrain which have developed a much better image compared to Saudi Arabia. It's cool to go to Dubai, right?! But, how to create the same "cool" image and put it together with the name "Saudi Arabia" will be a big big task.

[mariolis]

As an atheist, when looking for a tourist destination, a place that legally considers me a terrorist is very far down my list

[phoenix]

So much of this geopolitical content are being produced lately, I cannot watch them all! I love it!!!

[JohannGambolputty]

What I’ve learned: If you’re trying to build a credible, safe and Westernized society, make your assassinations look like an accident.

[boonubeen]

A Fine Example Of Putting All Your Eggs In One Basket

[xxxrrrxxxrrr]

You made a massive error in the video. Saudi oil break-even price for profitability isn´t 85 $/bbl. This is a number that´s been floated around as the break-even oil price for the Saudi state budget. A humongous difference. Break-even price for Saudi wells is probably around 5-20 $/bbl to turn a profit. Now that is of course a major simplification as well, there´re normally 3 different break-even prices (and 4 for Saudis). The 3 being:
A) break-even of gross profit (i.e you cover all the variable costs, but not fixed costs, it is still profitable in the short run to keep producing oil as without it you´d still suffer fixed costs)
B) break-even of net profit. This is where the company earns a "profit" profit, so in addition to covering the variable costs, you also cover the fixed costs with your revenues.
C) Break-even of capital costs. This means that you also cover the time value of money of your initial investments with the profits.
And for Saudis and many other oil-rich nations, there D) Break-even of state budget where all of the profits from the industry are enough to cover all government expenditures.

[weldin]

People are saying this is a warning for oil dependent economies, but that’s already what Venezuela was.

[AgentSmith]

It's not true that KSA needs over $85 a barrel to break even on oil production, but they do need that price to break even on their state budget. The break even on Saudi oil production is under $10 a barrel. Oil basically flows up ny itself and is easily harvested.

[DforDenmark]

Sam: Radical..
Saudi Arabs: Yup
Sam: Fundamental
Saudi Arabs: go on..
Sam: Systematic change
Saudi Arabs: and you lost me

Edit: this comment is trying to poke fun at the Saudi government and not the people.

[MassiveD]

At 00:37, you switched places between Hejaz and Nejd. Nejd is in the middle whereas Hejaz is next to the coast of the Red sea

[DensetsuVII]

The only reason I know 0:32 has the countries in the wrong places is from playing Europa Universalis 4 - and they said games would never teach me anything! (Don't worry Sam we understand~but do switch those when you can.)

[thewiseguy]

When you really understand all the dynamics of how the nations work, it's truly terrifying