Analysis: High Oil Prices, Ukraine War Pivot Point for Saudi Arabia

DUBAI, United Arab Emirates (AP) — A surge in global energy prices is benefiting Saudi Arabia as the world’s top oil exporter, but problems continue for the kingdom’s hot-headed crown prince.

Whether trying to find work for a growing number of unemployed youth or finding a way to end the long war that started in Yemen, Crown Prince Mohammed bin Salman and his father King Salman now face a potential turning point. for the kingdom in the midst of Russia’s war against Ukraine. .

Can the ruling Al Saud family restore a now troubled relationship with the United States, long the security guarantor for the wider Persian Gulf, as tensions simmer with Iran and higher fuel prices put pressure on Washington? ? Or is the kingdom leaning more toward China, now its biggest buyer of crude, or toward Moscow?

An American rapprochement seems unlikely. Asked in a recent interview what he would like President Joe Biden to know, Prince Mohammed bluntly said, “I don’t care.”

“It’s up to him to think about America’s interests,” the prince added.

However, for Saudi interests, perhaps no other country in the world can quickly benefit financially from the war as a kingdom.

Its vast oil resources, located near the surface of its desert expanse, make it one of the cheapest places in the world to produce crude oil. For every $10 increase in the price of a barrel of oil, Saudi Arabia stands to earn 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. Benchmark Brent crude now sits at $105 a barrel, a high not seen since 2014.

The extra cash comes in handy for Prince Mohammed, 36, whose vision for Saudi Arabia includes developing a futuristic city called Neom in the desert along the Red Sea. The latest iteration of it involves a ski slope project called Trojena, advertised in a computer generated commercial now in heavy rotation through the satellite channels of the Middle East.

But while expansive palaces now exist there, Planet Labs PBC satellite photos show that the broader Neom project is still in its infancy. It will likely be years before they produce the jobs the prince is counting on to propel the kingdom’s economy away from oil.

Meanwhile, youth unemployment, a carefully watched barometer since the 2011 Arab Spring uprisings, stood at 32.7% for men and 25.2% for women at the end of last year, according to the Saudi General Statistical Authority. Reopening movie theaters and allowing concerts in a kingdom where ultraconservatives see music as a sin is part of that push for jobs.

“If I am going to reduce the employment rate and tourism can 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 minor sin instead of a major sin.”

However, the shine has faded for human rights activists and some Western nations.

Saudi Arabia just executed 81 prisoners in a single day, the largest known mass execution in the kingdom’s history, after a pandemic hiatus. The Saudi-led war in Yemen against Houthi rebels continues despite a unilateral ceasefire in Ramadan years after the prince promised quick victory, decimating the Arab world’s poorest country.

Internationally, perhaps nothing received more attention than the murder and dismemberment of Washington Post columnist Jamal Khashoggi at the Saudi Consulate in Istanbul in 2018. The kingdom falsely insisted for days that Khashoggi left the consulate before acknowledging his murder.

Turkey moved on Thursday to end an ongoing court case over Khashoggi’s death. as its president seeks to mend ties with Saudi Arabia and the United Arab Emirates over economic concerns. For the United States, whose Intelligence services believe Prince Mohammed approved the operation that killed Khashoggifinding a solution to the murder of a US permanent resident remains much more complicated.

Biden, who called the crown prince “an outcast” during the campaign, has deliberately spoken only to King Salman since entering the White House. Biden’s first trip abroad was to a G-7 summit in England, rather than the sword-dancing hug then-President Donald Trump gave Saudi Arabia.

But now, with gasoline prices at the pump hitting record highs in March, Biden is facing a Saudi Arabia that repeatedly says it cannot be responsible for higher energy prices as it faces attacks from the Houthis. That puts increasing pressure on Biden, whose administration withdrew US air defenses from Saudi Arabia last year..

Saudi Arabia, as well as the United Arab Emirates, appear to be taking advantage of the situation to extract US concessions on Yemen while maintaining their own ties with Russia. The kingdom is also reportedly thinking again of selling some Chinese yuan crude oil to Beijing.instead of the US dollar.

Even Ukraine’s President Volodymyr Zelenskyy has intervened dramatically in the situation in recent days.telling the regional energy powers that “the future of Europe depends on their efforts”.

“The kingdom cannot, and must not, be left alone to safeguard global energy supplies at a time when the entire world is unanimously suffering from price increases that have been further triggered by uncertainty due to the situation in Ukraine.” wrote Faisal J. Abbasthe editor-in-chief of Saudi Arabia’s English-language daily Arab News.

“This is an international problem that affects almost every household in the world. Saudi Arabia therefore deserves all the support it can get.”

Where the support comes from in the future remains the question.


EDITOR’S NOTE: Jon Gambrell, Gulf and Iran news director for The Associated Press, has reported from each of the Gulf Cooperation Council countries, Iran and elsewhere since joining the AP in 2006. Follow him on Twitter at www.

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