But for Crown Prince Mohammed bin Salman (MBS), the price he paid may have been to sacrifice control of the oil cartel to Russia.
On the sidelines of the G20 summit in Japan, Saudi Arabia was successful in getting the Organization of the Petroleum Exporting Countries (OPEC) to extend oil production cuts until 2020.
The Saudi economy needs oil prices around $80 a barrel to balance its budget. However, Russia only needs oil at $42 a barrel. This means Russia’s rainy day fund has accumulated to $100bn from past production agreements.
So who is in OPEC’s driver’s seat, Saudi Arabia or Russia?
Johannes Benigni, chairman of JBC Energy Group, says, “It looks like the two have teamed up. Both are driving it.”
“The biggest burden is carried by Saudi Arabia. Saudi Arabia wants to have a broad coalition because they feel otherwise it’s really only down to them. So they are working very hard to bring a lot of different players to the table, and having Russia being part of it is for them instrumental, because it gives the impression that there is a wider group of players that are ready to cut.”
While Saudi Arabia needs high oil prices, Russia doesn’t. So why would President Vladimir Putin agree to the deal?
“Yes, it’s true that the Russian budget requires maybe lower prices,” Benigni says, “but I think it’s also important for Putin to form alliances. And this is an alliance that, if it works out, is helpful for him … So right now, he’s in a much more comfortable position than the Saudis are.”
According to Benigni, “There’s definitely too much oil out there … The tough message is, that if they want to maintain a stable market, they will have to cut even more next year … The cut that was prolonged now for nine months, probably has to be fine-tuned again by the end of the year.”
From start-up to unicorn: Challenges facing Middle East start-ups
The spectacular rise of Silicon Valley start-ups, including Uber, Lyft and Slack, gives the impression that success in the industry is easy.
In the Middle East, ride-hailing app Careem has also seen success, after it was bought by Uber for $3bn. But can that be replicated?
Mufeed Ahmed, cofounder of Qubicle and WashNow, and Majed Lababidi, CEO of Droobi Health, join Counting the Cost to talk about the path from idea to implementation in the Middle East.
“There are three top challenges every start-up has to face: one of them is fundraising, [number two is] hiring the right staff and number three is monetising the business to scale. I think the third one is very common to all the start-ups, internationally and in the region. But the first two, it’s very difficult here in the region,” says Lababidi.
“To have people trust in you from your idea to your launch stage, that’s one of the most challenging things in the region,” Ahmed agrees.
“In Silicon Valley, they are used to ideas of start-ups, and they have seen successful start-ups make a lot of money,” says Lababidi. “Here in the region, we have money, we have angel investors, we have people ready to invest. But not in the idea stage, or not in the start-up stage.”
However, he is also hopeful that things are changing.
“Now it’s different,” he says. “We witness Uber and Talabat and Careem … they have very successful stories now, and so the mindset is changing.”
Source: Al Jazeera News