Saudi Arabia's response towards oil price decrease (2014-2016)

Abstract

Oil prices had plunged in the year 2014, and impacted the world. Starting from different kinds of sectors from agriculture to businesses, and unquestionably countries both consumers, and producers. The aim of this thesis is to discuss and analyze the response of Saudi Arabia in facing the plunge of oil prices that started in the year 2014, and its' impacts towards the Kingdom. This research has found that it took two year to finally affect the Kingdom enough to finally to finally be aware of the changes that needs to be made by the Kingdom. In the first part, the oil price decrease will be discussed, and the causes that contributed to the on-going fall of prices. In the second part, Saudi Arabia's response will be discussed and elaborated. The nation responded the decrease of prices with a goal of economic reform "Vision 2030" by Crown Prince bin Salman. The response will be analyzed and related using the theories of: Shock Therapy, Rational Expectations, and Structural Adjustment Programs. In conclusion, this thesis hopes to offer readers the knowledge of how a fall of oil prices had impacted one of the world's oil powers. The purpose of this research paper is to learn about crude oil and its significant effects, and share a deeper understanding of how a high-living country adapts to a crash on their only commodity for economic growth, and the reasons behind their response, and decision-making.