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Saudi Arabia’s Economy Can Ill Afford Oil-Price War It Began

Crude oil storage tanks at the Juaymah Tank Farm in Saudi Aramco's Ras Tanura oil refinery and oil terminal in Ras Tanura, Saudi Arabia.

Crude oil storage tanks at the Juaymah Tank Farm in Saudi Aramco's Ras Tanura oil refinery and oil terminal in Ras Tanura, Saudi Arabia.

Photographer: Simon Dawson/Bloomberg 

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Saudi Arabia’s Crown Prince Mohammed bin Salman has just started an oil-price war. Winning it will come at a cost he might not be ready to pay for long.

If oil prices fail to recover and stay at less than half the level Saudi Arabia needs to balance its budget, the economy -- and the crown prince’s big ambitions to reform it -- may be among the biggest victims. The energy sector accounts for about 80% of the kingdom’s exports and two-thirds of its fiscal revenue.