Saudi Arabia’s Fight To Retain Regional Power

Gulf Oil Money: The Significant Fade-Away

Gulf money is everywhere, but it won't last, and nor will the reputations of the nations who hold it.

The Saudi Crown Prince is fully aware of this trend and is scrambling furiously to fix it. 

Gulf oil money still has plenty of allure, which means Washington is still (as always) looking for ways to appease both Saudi Arabia and its close ally Israel, a strategy which works in the case of Iran, but not in the case of the Palestinian Territories. Withdrawing from the Iranian nuclear deal was a big nod to both allies. Trump's Middle East 'peace plan', however, was not. It was primarily a huge victory for Iran, but the fact that Netanyahu was forced to temporarily back down from his West Bank annexation plans was Washington's bone to the Saudis, which it's really hoping will bankroll some sort of economic stability for the Palestinians. 

But plenty of tables are being turned these days. And they're all turning on the pressure of oil and gas. 

One table that has been turned is in the Mediterranean: Israel is now emerging as a major supplier of gas thanks to its massive finds and first production in the Leviathan field. This changes everything. It makes Israel a major power of sorts, because gas (just like oil) buys peace, even with a country such a Jordan, one of the staunchest supporters of the Palestinians, and home to over 2 million Palestinians. But Jordan needs gas, and while it doesn't necessarily sit well with many Jordanians, Israel is supplying it. It's a rocky road, but the first Israeli gas arrived in Jordan in early January. By the end of the month, Jordan's parliament had approved a draft law to ban imports of Israeli gas. And Trump's 'peace plan' won't help matters, serving to reinvigorate Jordanian protesters who were already uneasy about the gas-from-the-enemy imports. But practicality will win out, most likely. Same with Egypt, where Israeli gas - even for gas-rich Egypt - has bought a new form of peace. 

Other tables are being turned, too. Israeli gas and potential Cypriot gas is why Turkey is so frantically overstepping everywhere from Syria to Libya, and Cypriot waters. The oil-rich GCC countries are also finding that the tables, if not already turned, are creaking towards a different position. U.S. shale production has stripped OPEC of its magic wand, and Saudi Arabia of its status - a fact that the Saudi Crown Prince, MBS, knows full well, but is fighting tooth and nail to reverse by other means. 

Saudi Arabia's status as an oil-rich country that can buy its way into anything, must give way to that of a country that can spin dollars that aren't primarily from oil. And it's slow going, and very frustrating for the Crown Prince, who simultaneously has to repair a very damaged reputation since the murder and dismemberment of dissident journalist Jamal Khashoggi. The tables haven't only turned in terms of the Saudi oil prowess, either. Internally, the Saudis are trying to extricate themselves from some of MBS' expensive forays into proxy war territory, particularly in Yemen. The state coffers can't afford to keep funding this unwinnable war. They've also given up on trying to undermine Qatar. 

Now, it's all about diversification. And the big event to watch is the upcoming G20 later this year in Saudi Arabia. This event is meant to showcase the new and improved MBS, with reputation hopefully repaired by then, according to our sources on the ground. Every effort will be made to transform the reputation of Saudi Arabia, and MBS, in an attempt to cling on to regional power.  

Why Solar Is In for A Major Regression 

All that optimism that was just taking hold of the renewables industry may be wiped out by the coronavirus if things stretch into another quarter.

If all your attention is on the struggling oil and gas industry right now and consecutive days of losses lining up around the coronavirus, don't forget about renewables. We're in for some serious disruption here, as well. Most notably, right now, it's seen in the solar industry, but alarm bells across all renewable sectors were being sounded as early as last week. 

For solar and wind, the trick is in equipment supply, and we're already looking at project and production delays because of coronavirus. It's not time to panic just yet, because the real slowdown hasn't set in, it's just creeping up. If this continues in Q2, it might take a serious bite out of the global renewables industry. 

Particularly with regard to solar, the price of panels is a deal-breaker. The bulk of those panels and components come from Asia. That means we're in for solar price hikes soon because of the supply chain, and that is the worst thing that could happen to solar energy right now. It's like two steps forward, three steps back.