During a decline in oil prices, which factor has benefited Saudi Arabia according to the material?

• A. Higher costs
• B. Subsidies
• C. The ability to keep costs down
• D. Decreased output

Answer: (C)

When oil prices fall, what keeps a producer profitable is how low its costs can stay. Saudi Arabia benefits most here because its production costs are relatively low, giving it a low break-even price. That means it can continue exporting oil and maintain healthy margins even as prices drop, helping protect government revenue and preserve market share.

Higher costs would reduce or eliminate profitability in a price downturn, subsidies can intensify fiscal strain, and decreasing output lowers revenue. But the ability to keep costs down lets Saudi Arabia weather the decline and stay competitive.