Analysis: Oil prices, Ukraine war create Saudi pivot point
The world is looking to Saudi Arabia to boost oil production as global energy prices spike because of Russia’s invasion of Ukraine
1 April 2022, 15:06
6 min read
Share to FacebookShare to TwitterEmail this articleFILE - People walk past a banner showing Saudi King Salman, right, and his Crown Prince Mohammed bin Salman, outside a mall in Jiddah, Saudi Arabia, Saturday, March 7, 2020. A spike in global energy prices caused by Russia's war on Ukraine benefits Saudi Arabia as the world's top oil exporter, but problems remain for the kingdom's impulsive crown prince. (AP Photo/Amr Nabil, File)
DUBAI, United Arab Emirates -- The world is looking to Saudi Arabia to boost oil production as global energy prices spike because of Russia’s invasion of Ukraine. But that could mean rethinking how to deal with the kingdom’s controversial crown prince.
Crown Prince Mohammed bin Salman’s ties with longtime allies have been troubled by a string of issues. At the top of the list is the killing and dismemberment of Washington Post columnist Jamal Khashoggi at the Saudi Consulate in Istanbul in 2018, as well as Saudi Arabia’s intervention in neighboring Yemen’s war.
U.S. President Joe Biden has kept the 36-year-old prince at a distance. But with economic worries high, others may be putting the controversies behind them.
Turkey on Thursday moved to end an ongoing court case of Khashoggi’s death, a step that could ease tensions with Saudi Arabia.
With higher oil prices flooding the kingdom’s coffers, the crown prince and his father King Salman face a potential pivot point of their own.
Can the ruling Al Saud family reset its relationship with the United States, long the security guarantor for the wider Persian Gulf? Or does the kingdom tip toward further toward China, now its biggest buyer of crude, or Moscow?
An American rapprochement seems unlikely. Asked in a recent interview about what he’d want Biden to know about, Prince Mohammed bluntly said: “I don’t care.”
“It’s up to him to think about the interests of America,” the prince added.
Perhaps no other country in the world stands to rapidly benefit financially from the Ukraine war as Saudi Arabia.
Its vast oil resources, located close to the surface of its desert expanse, make it one of the world’s cheapest places to produce crude. For every $10 rise in the price of a barrel of oil, Saudi Arabia stands to make an additional $40 billion a year, according to the Institute of International Finance.
It’s a wild turn of events considering oil prices in April 2020 turned negative at the height of lockdowns in the coronavirus pandemic. Now, benchmark Brent crude stands at $105 a barrel — highs unseen since 2014.
The additional cash comes in handy for Prince Mohammed, who also has to deal with questions at home, particularly how to find jobs for a growing number of unemployed youth.
The crown prince has been known for his brash moves. His vision for Saudi Arabia includes developing a futuristic city called Neom in the desert reaches along the Red Sea. Its latest iteration involves a ski slope project called Trojena, advertised in a computer-generated commercial now in heavy rotation across Mideast satellite channels.
But while expansive palaces now exist there, satellite photos from Planet Labs PBC show the wider Neom project remains at an early stage. It likely will be years before it produces the jobs the prince counts on to slingshot the kingdom’s economy away from oil.
Meanwhile, unemployment among youth stood at 32.7% for men and 25.2% for women late last year, according to the Saudi General Authority for Statistics. Reopening cinemas and allowing concerts in a kingdom where ultraconservatives view music as a sin comes as a part of that push for jobs.
“If I’m going to get the employment rate down, and tourism could create 1 million jobs in Saudi Arabia, ... that means I have to do it,” the prince told The Atlantic magazine in a recent interview. “Choose a lesser sin rather than a bigger sin.”
The sheen, however, has come off for human rights activists and some Western nations.
