Saudi is no longer to afford the cause of the current oil price

Saudi unveiled spending cuts in its 2016 budget, subsidy reforms and a call for privatization to mitigate the deficit caused by the low oil prices. Saudi has raised its oil production and lowered the prices in order to win the market share from higher-cost producers.However, the action taken by Saudi suggests that its own is not a low cost oil producer. Maybe the cost of oil production is low; however, the country requires a higher income from oil exports to support its government spending. Therefore, Saudi may no longer maintain its current production level and may reduce its production in the near future, thus the oil price will rise above the current level. However, due to the weak demand side, the oil price will hardly rise back the level two years ago.