Saudi Arabia’s Emerging Financial Strength

When the Saudi national oil company which is listed on the bourse announced revenues as high as $161 billion for last year it came as no surprise as oil and gas producers seem to be the prime beneficiaries of the Ukraine conflict. The ploy of the US and Western Europe to impose sanctions on Russian oil and gas exports are not having the desired bite on the Russian economy. China’s appetite for energy is surging after its loosening of Corona Virus restrictions.

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The Kingdom of Saudi Arabia (KSA) has launched its Saudi Vision 2030 an integral part of which is building futuristic cities in the desert with distinctive and environmentally attractive silhouettes which in itself requires huge financing. Aramco crude production averaged at slightly above 11 million barrels a day in the year 2022 and this massive production will likely finance such steel and concrete jungles even if it contributes to climate change.This has drawn the ire of environmentalists.

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Climate Change Activists Unhappy over Burning of Fossil Fuel

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There will be fireworks at the United Nations COP28 climate talks set to convene in Dubai ,UAE . Despite Aramco’s establishing of a $1.5 billion Sustainability Fund , net zero carbon pledges and a carbon-capture-and-storage facility the Secretary-General of Amnesty International Agnès Callamard came down hard on Aramco as being a significant contributor to climate change.She also outrightly accused KSA of using its oil revenues to finance crackdown on dissent and its ugly record of human rights abuse.

US Foreign Policy Dictated by Oil Producers and Mega Consumers

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Buoyed by its financial strength KSA is recasting its image from an energy based economy to a tourist and fashion hub and the ambitious launch of Riyadh Air which will serve 100 destinations worldwide synchronizes with the Saudi Vision 2030.The US can only coerce and persuade the Gulf oil producers to not raise energy prices as it contributes to worldwide inflation brought on by Russia’s invasion of Ukraine .Aramco is not the only energy giant in the world to rake in hefty profits as a consequence of the war in Ukraine and BP and Shell are faring exceedingly well.Being a mega oil consumer China last week secretly brokered a peace deal between Iran and Saudi Arabia wherein both countries resumed diplomatic ties  and the US foreign policy experts seem to have been ignorant of the rapidly changing oil dynamics of the Middle Eastern region. Lowering of hostilities between Iran and KSA will allow these two countries to focus on exploiting their hydrocarbon potential and flex their economic muscles in the Islamic world.