A week before Christmas, Saudi Arabia (KSA) released its 2019 budget. The headline: KSA will push domestic economic growth through the largest ever government expenditure – Saudi Riyal (SR) 1.1 trillion, writes Warren Pies, equity strategist at Ned Davis Research. This fiscal policy will be funded by revenues that exceed spending, and that’s where this gets really interesting for oil prices, say Pies. Some pretty outlandish assumptions are being made about oil revenues, and this oil prices. Assuming 10.2 million barrels per day of production (the output agreed to in the most recent OPEC agreement), Brent oil will have to average around $80 a barrel this year for the Kingdom to hit its revenue target. Even after the recent bounce in oil prices, it still sits 40% below the Saudi’s assumed average price for 2019, says Pies.For investors, that means there is little risk that the Saudis will abandon the OPEC quota system again or that it will “cheat” on its stated production quota. Instead, the Kingdom will act decisively when oil trades at these lower levels. The Saudi put is alive and well, he concludes.