Saudi Crown Prince Continues Power Consolidation

Over the last few days, Saudi Crown Prince, Mohammad bin Salman, has arrested or detained individuals
under the charge of corruption. Yet, these efforts are intended to consolidate his power before he becomes
King. Perhaps this consolidation is essential to the successful execution of his Vision 2030, but it does fly in
the face of projecting a transparent, increasingly liberal economy worthy of foreign investment.

More at Stake in Saudi than IPO

King Salman is the last of the Sudairi Seven to rule Saudi Arabia before the next generation (grandsons of King Abdulaziz ibn Saud) takes power. If Crown Prince, Mohammad bin Salman, ascends the throne in the next one to two years, he will rule – absent medical issues or political upheaval – for decades. This will include the period when judgment will be rendered on his Vision 2030 for diversification of the Saudi economy. The oil market’s focus on the Saudi Aramco IPO and its perceived connection to Saudi oil policy should be seen within the context of larger issues related to internal stability.

Qatar Crisis Hard to Resolve

This is more than a diplomatic row among GCC members. Perhaps emboldened by President Trump’s visit, Saudi Arabia and its allies have declared if you are with Iran (or specific radical Sunni groups), you are against us. This effort to delineate sides in the region cannot be easily reversed without substantial outside pressure. Expect a geopolitical premium to creep into energy prices as this dispute continues.

Weekend in the Gulf Changes Little

Notwithstanding the pageantry of the U.S. President visiting Saudi Arabia and the enthusiasm of young Iranians hailing their moderate President’s reelection, little changed in terms of the region’s political stability, the battle with ISIS or oil policy this weekend. The clearest signal from the weekend was the public and forceful assertion that the U.S. has allied itself with the Saudis versus Iran, which can only have stoked the age-old rivalry. This should not impact OPEC dealings this week as Iran’s production is near a top, but it is likely to have repercussions down the road when (and if) Iran’s productive capacity rises.