Over the weekend, Saudi Arabia launched a large anti-corruption sweep of the elite in a large-scale operation that saw many royal family members detained, including the powerful businessman Prince Al-Waleed of the Kingdom Holding Company. Detainees were held at the Ritz-Carlton hotel in Riyadh.
How the Ritz Carlton became a temporary prison: https://www.theguardian.com/world/2017/nov/06/how-saudi-elite-became-five-star-prisoners-at-the-riyadh-ritz-carlton
Experts had questioned whether corruption and potential internal opposition might slow Crown Prince Mohammed's economic modernization plan, Vision 2030. By consolidating power, the prince's ability to shape Saudi will be greatly strengthened in the extended term. In this scenario, Saudi will be better off and the news may be bullish for crude prices. Other analysts believe it may be bearish for crude prices, by delaying the kingdom in the near term as it would want more oil revenue to stabilize internal affairs (keeping generous subsidies for energy, food, and social services in place longer than originally planned).
While uncertainty remains in this issue, one things has become apparent. Saudi-led OPEC is not nearly as powerful as it once was. Thirty years ago, news of political upheaval like this could have send crude prices soaring. This week, we saw a jump on Monday that subsided into Tuesday, and again today. The emergence of North American shale oil has truly changed the calculus of the international oil markets.
For more details, see: https://www.washingtonpost.com/business/economy/what-the-royal-purge-means-for-saudi-arabia--and-its-oil/2017/11/06/9cba9142-c256-11e7-afe9-4f60b5a6c4a0_story.html
How the Ritz Carlton became a temporary prison: https://www.theguardian.com/world/2017/nov/06/how-saudi-elite-became-five-star-prisoners-at-the-riyadh-ritz-carlton
Experts had questioned whether corruption and potential internal opposition might slow Crown Prince Mohammed's economic modernization plan, Vision 2030. By consolidating power, the prince's ability to shape Saudi will be greatly strengthened in the extended term. In this scenario, Saudi will be better off and the news may be bullish for crude prices. Other analysts believe it may be bearish for crude prices, by delaying the kingdom in the near term as it would want more oil revenue to stabilize internal affairs (keeping generous subsidies for energy, food, and social services in place longer than originally planned).
While uncertainty remains in this issue, one things has become apparent. Saudi-led OPEC is not nearly as powerful as it once was. Thirty years ago, news of political upheaval like this could have send crude prices soaring. This week, we saw a jump on Monday that subsided into Tuesday, and again today. The emergence of North American shale oil has truly changed the calculus of the international oil markets.
For more details, see: https://www.washingtonpost.com/business/economy/what-the-royal-purge-means-for-saudi-arabia--and-its-oil/2017/11/06/9cba9142-c256-11e7-afe9-4f60b5a6c4a0_story.html
