Coronavirus: 3 Things #SaudiArabia Can Do to Lead Again on Oil - Bloomberg

Coronavirus: 3 Things Saudi Arabia Can Do to Lead Again on Oil - Bloomberg:

In the wake of Monday’s historic plunge in crude-oil futures, Saudi Arabia issued a press release stating that it will “endeavor to achieve stability” in a market currently suffering from a disintegration of demand. For the kingdom, it is vital not only to raise the price of oil, but also to be a leader in the effort to do so.

With a struggling, one-dimensional economy, the Saudi monarchy needs higher prices to keep its political future secure. Moreover, the kingdom has long valued its image as the most influential force in oil, and it wants to return to a leadership position within OPEC and the markets. Riyadh cannot increase oil demand, but it can take steps to fix oil prices, protect the monarchy and return Saudi Arabia to a position of stabilizing leadership. This would require some tough decisions and sacrifices — perhaps more than the government is willing to make, and there’s a chance they could backfire. Nevertheless, here’s what Saudi Arabia could do:

Energy Shake-Up?

The current energy minister, Prince Abdulaziz bin Salman, lost the confidence of the markets when Saudi Arabia recklessly announced a plan for extreme oversupply last month and then followed through with the policy even when it was clear that global demand had collapsed. It was Saudi Arabia’s announcement, not Russia’s refusal to cut more oil, that led directly to the initial descent of oil prices on March 9. Even the Easter OPEC+ production cut was credited by many to President Donald Trump, not Saudi Arabia’s energy minister. Replacing Abdulaziz with an oil figure within the ranks of Saudi Aramco’s base in Dhahran might help build trust in the market. While removing King Salman’s son from his position would be a major step, it wouldn’t be without precedent. Another of the king’s sons, Khalid bin Salman, was ambassador to the U.S. before Salman recalled him after the backlash that followed the 2018 murder of Saudi journalist Jamal Khashoggi.