What a beautiful April Fool's Day the sheikh has reserved for the markets Abdulaziz bin Salman, Minister of Energy of theSaudi Arabia. Push the price of oil above $100. Yet until a few days ago the brother of the Almighty Mohammed, the strongman of the Kingdom, had whispered "confidentially" that Riyadh would vote against a cut in oil production because "Aramco it can support a price between 60 and 75 dollars” guaranteeing an adequate flow of income but also the recovery of customer consumption, undermined by recession and rising inflation.
Saudi Arabia: the low blow of the surprise production cut
Hence the bewilderment for the low blow of Saturday 1st April: Saudi Arabia, in agreement with Russia and a substantial handful of cartel countries, voted for a production cut by 1,16 million barrels, setting the stage for a robust rise in oil prices above the $85 barrier. And even more. A nasty blow that tastes like a joke if we consider that Western countries, led by the European Union, have entrusted Abu Dhabi with the leadership of the next Cop 28 conferencededicated to the fight against climate change. But what reliability can Sultan Al Jaber, head of the conference but also of the Abu Dhabi National Oil Company, an oil giant that alone is worth more than Exxon and BP combined? A bit like offering Dracula the guidance of blood donors, wrote the representatives of over 400 NGOs in view of the Dubai summit in November.
The real reason for the rise in oil
But who knows at what levels the price of crude oil will be at the time. Against the prospect of new increases, thesluggish price trend. Including the failure of demand from China to take off. Or, even more, the sales which Russia is forced to get around the Western embargo, settling for prices well below the price list. But these assessments, based on the performance of the economies and the conflict in Ukraine, do not help to understand the reasons for the increase in crude oil or, even less, the attitude of the Saudis. “The real reason for the increase – writes the Wall Street Journal – lies in the need to finance the development plan of thehuge playground wanted by mohammad bin salman”. The prince is more than ever focused on developing his megalomaniac plans – including in the Vision 2030 – which include, among other things, the creation of a hotel area the size of Belgium, dotted with Maldive-style resorts above the water, but also a futuristic high-tech city which should cover an area equal to 33 times NYC.
Prince Bin Salman's ambition and the conflict with Joe Biden
This is the polar star of Prince Bin Salman's politics, he underlines Goldman Sachs. A target at risk, despite the 650 billion dollars in the coffers of the sovereign wealth fund, if the price of oil fluctuates steadily under $100. This is why Ryiad, in violation for the second time in six months of the US invitation to contribute to the drop in prices, has decided to lead the cut in production below the level of foreseeable consumption. Of course, plays a role the conflict between the prince and President Biden for the Khashoggi crime. In this regard, the visit of the US president to Saudi Arabia was of little use: shortly after the meeting, Bin Salman ordered an initial price hike last October. He then weighs the bank offered by Beijing, broker of the possible peace between the Saudis with Tehran and from Moscow, which shares the interest in the increase in prices.
Oil over $100 or risk blowing the Vision 2030 playground
But at the origin of the turnaround of Saudi Arabia, which remains by far the main customer of the US military arsenal, there is the "Saudi First" doctrine: the transformation of the country from petrochemical powerhouse to entertainment realm, taking advantage of the geographical position, median between Europe and the East, at the service of tourism. A megalomaniac plan also because, at least so far, very few have paid a single dollar to support the programme. And Abdelaziz, the prince of oil who has already (successfully) set traps for oil traders in the past, has put his hands forward: at this rate, quotations of 80-85 dollars will not be enough for us. Woe, he would have added, if the quotations were to fall further, as cannot be ruled out given the consumer trend. Hence the decision to proceed with a sharp increase in prices that pushes oil above $100. European and American consumers must resign themselves to paying the entrance fee in advance for the huge amusement park that will be built on the shores of the Red Sea.
