The crisis in Ukraine is making Saudi Arabia which is one of the cheapest sites in the world to produce crude and it’s royal family very rich.
As global energy costs rise as a result of Russia’s invasion of Ukraine, the world is looking to Saudi Arabia to increase oil output. However, this may necessitate a reassessment of the kingdom’s controversial crown prince.
A series of events have strained Crown Prince Mohammed bin Salman’s ties with longstanding allies. The assassination and dismemberment of Washington Post columnist Jamal Khashoggi at the Saudi Consulate in Istanbul in 2018, as well as Saudi Arabia’s intervention in Yemen’s civil war, are at the top of the list.
The 36-year-old prince has been held at arm’s length by US President Joe Biden. Others, however, may be putting the scandals behind them as economic concerns rise.
Turkey took a step on Thursday to stop the ongoing court case surrounding Khashoggi’s killing, potentially easing tensions with Saudi Arabia.
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Higher oil prices have flooded the kingdom’s coffers, putting the crown prince and his father, King Salman, at a crossroads.
Is it possible for Saudi Arabia’s ruling Al Saud family to rebuild its relationship with the United States, which has long served as the region’s security guarantor? Or is the kingdom leaning more toward China, which is now its largest crude client, or Moscow?
A rapprochement from United States appears unlikely. In a recent interview, when asked what he’d like Biden to know, Prince Mohammed stated flatly, “I don’t care.”
“It’s up to him to think about the interests of America,” the prince concluded.
Saudi Arabia, maybe more than any other country in the world, poised to profit handsomely from the Ukraine conflict.
Its massive oil reserves, which are located near the surface of its desert expanse, make it one of the cheapest sites in the world to produce crude. Saudi Arabia stands to gain $40 billion a year for every $10 increase in the price of a barrel of oil, according to the Institute of International Finance.
It’s a bizarre turn of affairs, given that oil prices turned negative in April 2020, at the height of the coronavirus pandemic’s lockdowns. Brent crude is now trading at $105 a barrel, the highest level since 2014.
The extra funding will help Prince Mohammed, who is also dealing with domestic issues, such as how to find work for an increasing number of unemployed youth.
The crown prince has a reputation for making bold decisions. His idea for Saudi Arabia includes the construction of a futuristic city dubbed Neom on the Red Sea’s desert reaches. Its most recent iteration features a ski slope project called Trojena, which is promoted in a computer-generated commercial that is currently airing on satellite channels throughout the Middle East.
However, despite the presence of large palaces, satellite images from Planet Labs PBC suggest that the Neom project is still in its early stages. It will most certainly take years before it generates the jobs that the prince expects to shift the kingdom’s economy away from oil.
According to the Saudi General Authority for Statistics, youth unemployment was 32.7 percent for men and 25.2 percent for women late last year. The hunt for jobs includes reopening cinemas and legalising concerts in a monarchy where ultraconservatives regard music as a sin.
In a recent interview with The Atlantic magazine, the prince said, “If I’m going to get the unemployment rate down, and tourism could create 1 million jobs in Saudi Arabia,… that means I have to do it.” “Choose a lesser sin rather than a bigger sin.”
Human rights campaigners and some Western countries, on the other hand, have lost their lustre.
After a pandemic lull, Saudi Arabia executed 81 convicts in a one day, the largest known mass execution in the kingdom’s history. Despite a Ramadan cease-fire, the Saudi-led war in Yemen against Houthi rebels continues to rage years after the prince promised a swift victory — and the Arab world’s poorest country has been left in shambles.
Nothing has gotten more international attention than the assassination of Jamal Khashoggi.
The operation that killed Khashoggi, a permanent resident of the United States, was believed to have been sanctioned by Prince Mohammed, according to US intelligence services. Finding a resolution to a rift with a close ally is still a mess to sort out.
Biden, who campaigned on calling the crown prince “a pariah,” has made it clear that he has only spoken to King Salman since taking office. Rather than the sword-dancing embrace that then-President Donald Trump gave Saudi Arabia, Biden’s first international trip was to a G-7 summit in England.
Saudi Arabia and the United Arab Emirates appear to be using record fuel prices to get concessions from the United States on Yemen.
Saudi Arabia has consistently stated that it cannot be held liable for energy price increases resulting from Houthi attacks on its oil facilities. This adds to the strain on Biden, whose administration pulled American air defences out of Saudi Arabia last year.
Saudi Arabia, on the other hand, maintains its own ties with Russia. The country is also allegedly considering selling some crude oil to Beijing in Chinese yuan rather than dollars.
In recent days, Ukrainian President Volodymyr Zelenskyy weighed in on the subject, encouraging Qatar and other regional energy heavyweights to boost production to compensate for the loss of Russian supplies. ” The future of Europe depends on your efforts,” he told them.
Saudi Arabia needs “all the support it can get” against the Houthis, according to Faisal J. Abbas, editor-in-chief of the English-language daily newspaper Arab News.
“The kingdom cannot — and must not — be left alone to safeguard global energy supplies at a time when the entire world is unanimously hurting from price hikes,” he added.
The question of where future support will come from remains unanswered.