Saudi Crown Prince Mohammed bin Salman has been making headlines again these last few days. After giving an interview to CBS in which he admitted the mistakes of the Khashoggi murder last year, a media frenzy followed, with a vast lineup of reports linked to the 1 year remembrance day of the brutal Khashoggi murder, mainly intended to weaken the position of the Saudi Crown Prince. Unnamed sources are being quoted stating that MBS’s position is being attacked from all sides, including within the Kingdom.
Since the emergence of MBS as a main power player in the Kingdom, the Crown Prince has been under fire from his ultra-conservative religious opponents inside Saudi Arabia. More recently, liberal voices such as former minister of energy Khalid Al Falih have been criticizing some of the Crown Prince’s policies. MBS has responded to this dissent, first with the Ritz Project and then with the removal of Khalid Al Falih and several other major power players. The strategy currently being implemented is designed to support the long-awaited Aramco IPO, an event that MBS sees as solidifying his power in the Oil Kingdom.
The consolidation of MBS’ power all seemed to be going as planned until the recent drone attacks on Abqaiq. The severity of these attacks seems not to be fully understood by media and analysts as most are still taking the word of Aramco and the Saudi minister of energy as gospel when it comes to the impact. To call the updates coming out of Saudi Arabia optimistic is an understatement. An attack of that size cannot be undone in a matter of days.
And even if the damage done to Abqaiq is technically restored, and Saudi oil is flowing at the same rates as before, the world has changed. We now know that with a small amount of low-intensity advanced weapon systems, the heart of the global oil sector can be significantly disrupted. Saudi Arabia’s pivotal position as the main stabilizer of the oil markets has been at best dented or worst, destroyed. No repair shop will be able to bring back the unquestioned confidence in Saudi Arabia as the eternal swing producer upon which the security of energy supply can depend. With less than 30 drones and cruise missiles, Saudi’s spare production capacity was removed from the market. And, contrary to what many analysts believe, it is yet to come back online. Related: Markets Fear Oil Price Collapse: Should OPEC Cut More Production?
The Iran-Saudi conflict has entered a new phase, with the real threat of a full-scale conflict. The situations in Iraq and Libya will also suffer from the instability created by this stand. And despite this instability, Saudi Arabia’s important ally, the United States, has refused to be fully drawn into the conflict. The link between Trump and MBS appears to be weakening as the geopolitical pressure cranks up. U.S. analysts and policymakers don’t seem to understand that this stance not only weakens U.S. influence in the region but directly opens the doors for opposition to MBS inside of the Kingdom.
Western and Arab media sources have published several stories recently about the growing opposition to MBS inside the Al Saud Royal Family. These reports are undoubtedly true, and MBS is heading for crunch time. The Crown Prince’s future is to be decided in the next couple of months, so very little time remains for opposition players. After the Yemen War quagmire and the damage done in Abqaiq, some royals will undoubtedly try to weaken MBS' position. The main issue currently is that there is no real contender available, as most Saudis are still supportive of MBS. The old guard, such as the brother of King Salman, Prince Ahmed bin Abdulaziz (77), is not favored by the young. Still, MBS has to speed up his passion projects as success is everything when it comes to winning power in Riyadh. Related: Rig Count Falls For Seventh Straight Week
It is not surprising that the recent positive media reports emerging from Saudi Arabia come just before the Davos in the Desert or FII2019 meeting is held. A possible Aramco IPO presentation at FII2019, followed by a 1% listing at the Saudi Tadawul, would put MBS firmly back in the spotlight and weaken any opposition. With the current stalemate in the region, more than 4000 investment funds, sovereign wealth funds, and corporations will be sitting in the conference halls of the Ritz, willing to hand over the much-needed cash and multibillion projects to solidify MBS’ position.
Open support for MBS will be in place very soon, with Russian President Vladimir Putin expected to head to Riyadh very soon. In stark contrast to the waning Trump-MBS friendship, Putin is openly a big supporter of the Crown Prince’s strategy and dreams. Russian sovereign wealth fund RDIF and others are flocking to Riyadh’s hotels as further evidence of Russian support. Moscow appears set to capitalize on Washington’s weak response to the recent attacks in Saudi Arabia, and MBS will be eager to take advantage. A closer Saudi-Russian relationship may end up helping to restrain Iran, as the Islamic Republic is heavily dependent on Moscow’s support.
By Cyril Widdershoven for Oilprice.com
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