In Mid-2014, the price of crude oil per barrel was $105. Oil Prices reduced to $48 within six months. The price of oil has been below $50 every since. Its price has gone to as low as $33 early last year and is currently priced at $47. Oil prices have hurt oil producing countries, such as Venezuela and Nigeria, and thus dampening economic growth in this countries. Unsustainable high prices could have caused low oil prices, competition between major OPEC countries, the U.S and Canadian oil shale frackers, slow growth in the Chinese economy, as well as, climate change combatting measures.

The effects of low oil prices on Saudi's economy

In Mid-2014 when the oil prices were above the $105 mark, Saudi's stock market was valued at 9,800 points. This valuation has so far reduced to 5,500 points within a year and a half and thus reducing local and foreign investment in Saudi's stock market. The eroding in the valuation of Saudi's stock market has reduced confidence in the country's economy.

Saudi Arabia's economy contracted by 0.5 percent in the first quarter of this year. The reduction of the economy was due to the capping of oil production by OPEC countries. Growth in the previous quarter was much higher at 2.2 percent. The price of oil has also reduced the country's earnings from oil.

Oil corporations have also remitted fewer taxes to the Saudi government due to lower revenues.

Low oil prices have also reduced the country's government budget. In 2013, its budget was 6.5 percent higher than the previous year. In 2014, the budget was 2.3 percent less than 2013, the budget reduced by 15 and 17.3 percent in 2015 and 2016 respectively.

The Saudi government was forced to borrow $10 billion in April 2016 according to the Fortune magazine; this was Saudi's first ever borrowing in over ten years.

Foreign exchange reserves

The biggest loss that the Saudi Arabian Economy has suffered is in its foreign exchange reserves. Saudi's foreign exchange reserves were valued at $740 billion in mid-2014 when oil prices were high.

The reserves currently stand at $494 billion due to weak earnings from oil exports and the lack of foreign currency in the Saudi economy.

According to trade economics, capital flows have been on the decline since mid-2014. Money flowing out of the economy was higher than money flowing into the Saudi economy. Majority of investors seem to be evading risks due to low oil prices and waiting for the prices to bounce back to their pre-mid 2014 levels. The economy lost capital worth U.S $21,245 million in the fourth quarter of 2016. Low oil prices in the future will worsen the country's situation thus resulting in economic situations experienced in Venezuela.