The low oil price continues to wreak financial havoc on the largest oil producer in the Middle East. While the Mainstream press has published articles forecasting a rebound in Saudi Arabia’s financial outlook, due to higher oil prices this year, it seems like the Kingdom’s problems are just beginning.

In order to make up for falling oil revenues, Saudi Arabia has been liquidating its foreign currency reserves at a pretty good rate over the past two and a half years. I discussed this in my article, Bankrupting OPEC… One Million Barrels Of Oil At A Time. In that article I published this chart:

Due to the rapid oil price decline, Saudi Arabia liquidated 27% of its foreign currency reserves. At its peak, Saudi Arabia held $797 billion in foreign currency reserves. In just two and a half years, Saudi Arabia’s currency reserves declined $258 billion (U.S. Dollars) to $536 billion currently (Dec 2016).

I also published the following chart showing Saudi Arabia’s foreign currency reserves declined in 2016, even as the oil price recovered from a low of $30.7 in January to a high of $53.3 in December:

Now, what’s even more interesting… is that Saudi Arabia’s foreign currency reserves took another BIG HIT in January, by falling $12.5 billion in just one month:

Saudi Arabia’s foreign currency reserves fell from $536.3 billion in Dec 2016, to $523.8 billion in January. The chart displays the figures in Saudi Arabia Riyal. They were converted to U.S. Dollars. This is a pretty good drop in just one month. Moreover, this occurred even as the oil price increased to $54.6 a barrel in January versus $53.3 in December.

I would imagine some would assume that this fall in exchange reserves may have been due to the recent Saudi oil production cut. While it is true that Saudi Arabia has cut oil production, as well as exports, this only accounts for a small portion of the $12.5 billion decline in foreign currency reserves.