Economic turmoil in sight in Saudi Arabia. The collapse of black gold prices, a consequence of the oil showdown that the kingdom has engaged with Russia, is likely to weigh heavily on the country's development projects. The expected fall in the amount of oil revenues, which form the bulk of the state budget, promises to affect the "Vision 2030" plan, the program for modernization and diversification of the economy launched by Crown Prince Mohammed Ben Salman, known as "MBS", who was already struggling to take off.
" We will start to suffer again ", sighs a Lebanese businessman, on condition of anonymity, who works in events in Arabia and has benefited in recent months from the multitude of conferences generated by the initiatives of the government. "Crude prices won't go up anytime soon, he continues. After the previous fall in prices in 2014, we had gone through dark years. The government will be forced to cut spending drastically. "
Riyadh has decided to open wide the valves of its production, in retaliation for Moscow's refusal to continue the policy of support for crude prices, implemented since 2016 within OPEC + (group of twenty-four countries , composed of members of the Organization of the Petroleum Exporting Countries and ten other states, including Russia). After announcing on Tuesday March 10 an increase in production of at least 2.5 million barrels per day (b / d), bringing it to the record level of 12.3 million b / d in April, the kingdom added to its price on Wednesday, March 11, promising to put 13 million b / d on the market.
Worst fall in almost thirty years
As an immediate result of this strategy to capture Russia’s market share, oil prices have plunged by about 25% since Monday, their worst drop in nearly 30 years. The United Arab Emirates, the fourth largest producer of OPEC and a close ally of Saudi Arabia, has also said it is ready to increase production by more than 1 million bpd.
The fears aroused by this tightrope policy were immediately expressed on the Tadawul, the Riyadh Stock Exchange, which has lost 13% since Sunday March 8. The feeling of uncertainty among investors is exacerbated by the latest wave of arrests in the royal family, ordered last week by "MBS". This purge, which targeted in particular one of King Salman’s brothers, Prince Ahmed Ben Abdelaziz, is intended to rid the crown prince of any potential obstacle in his march to the throne.
