Remarks:You can see the full text 'OCIN INITIATIVE'
(Japanese Version)
October 2019
3. Problems confronting in the future
As an energy minister, Prince Abdulaziz bin Salman (AbS) will be assessed his reputation depending on his future achievements. There will be three major problems in front of him. They are (1) The relationship with his brother-in-law, Crown Prince Muhammad bin Salman (MbS), (2) How to manage with OPEC members and/or non-OPEC oil producing countries, so-called OPEC + (plus), and (3) How to tackle with the United States, Russia and Iran in the international political dynamics, where oil and politics are closely inter-related.
It seems almost certain that the relationship between AbS and MbS may eventually break down sometime in the future unless AbS fully obeys to MbS. Their father, King Salman, is afraid of such nightmare, so he concentrates power on MbS. The reorganization of the Ministry of Energy and Mineral Resources into the Ministry of Energy and decoupling of Aramco from the Ministry of Energy indicate to limit AbS’s control to oil policy.
King Salman thinks that Crown Prince MbS should be the next king, and then the throne will be succeeded to the son of MbS. This is the prevailing rule of male direct inheritance of other monarchies in the world. He was eager to maintain the stable dynasty by the Saud royal family, effectively by his descendants. King Salman also thinks that MbS, nevertheless he is deemed as unfavorable person (persona non grata!) at home and abroad due to his dictatorship, seems to be more suitable to maintain the monarchy system than AbS, who is emotional and pedantic. Salman got the throne by means of power struggle inside the Saud family using maneuver and craft. Therefore, it is sure that Salman thinks MbS, father-like son, would be most suitable successor for throne. The energy minister will soon switch to young generation of oil technocrats whom MbS can control (or possibly MbS's full brother Khalid bin Salman). In any case, it seems to be obvious that the half-brother AbS will have no chance to survive in power struggle.
The next problem for AbS is how to manage the oil matters with OPEC members and non-OPEC oil producers (so-called OPEC+). Oil price is currently around $ 60 / barrel (Brent crude oil). It looks like that production adjustment by OPEC+ shows good performance. But if looking at the actual production revel of each OPEC members, decrease of production is due to not only by adjustment but also by other factors. Iran's production was actually sluggish due to US embargo. Venezuela faces the US Economic sanctions and domestic turmoil. In Libya, civil war is the main factor of production cut. On the contrary, Iraq has increased its production, and it is true that non-OPEC Russia has intentionally delays committed reductions.
Overlooking the global supply and demand, the United States has continued to increase shale oil and gas production, and is now the world's largest hydrocarbon producer (see BP Statistical Review of World Energy 2019). On the other hand, there is a sign of a recession in the global economy due to trade friction between the US and China, and there are many predictions that oil prices will fall in the future. Saudi Arabia, OPEC’s biggest producer, is expected to lead other oil producers. But it is a question whether AbS can show such strong leadership.
Oil and international politics are closely related each other. Nowadays Saudi Arabia tries to maximize oil revenues, which is the only source of finance. At the same time, Saudi Arabia has to tackle the complicated relations with the United States, Russia and Iran. Sometime, it may lead to the conflict of interest. Saudi Arabia cannot win a proxy war with Iran over Yemen without US military support. Russia is an ally of Saudi Arabia to maintain oil prices in OPEC + group. But at the same time, Russia is troublesome for Saudi Arabia taking into consideration the inseparable relation with US. Saudi Arabia suffers from how to deal with Russia. Against religious state Iran, Saudi Arabia is desperate to maintain the absolute monarchy.
In terms of energy market, Saudi Arabia shares interests with Russia and Iran. Oil-producing countries keep a close eye on US oil industry. In terms of military diplomacy, Saudi Arabia simply and obediently follows the United States. In Yemen, Saudi Arabia fell into a mad swamp. Saudi Arabia plays the leader of sanctions against Iran, but lost its foothold in Syria where Russia and Iran keep their position.
Saudi Arabia changes the partnership with the United States, Russia and Iran from time to time. Saudi Arabia is forced into tightrope diplomacy. Now it looks like that Saudi Arabia is isolated in the region.
In the energy field, AbS is unable to be outsider to these dilemmas and trilemmas. Problems cannot be solved even AbS makes pedantic speech at an international conference. He will give himself away sooner or later. AbS will give up his post in the near future.
Your comment on this matter would be highly appreciated.
By Areha Kazuya
E-mail: Arehakazuya1@gmail.com
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