Saudi Arabia

DRIVER: Saudi Arabia could see some tumultuous economic policy changes provoked by the lower oil price era and the emerging challenge from renewable energies. It also faces threats from Middle East turmoil.

• [New] Given the experience of the United States since 2001, there is little reason to expect that additional arms sales to countries like Saudi Arabia, Pakistan, Qatar, or the United Arab Emirates will reduce terrorism, much less anti-American terrorism specifically.
• [New] The Trump administration's attempt to balance Tehran by reinvigorating the long-standing alliance with Saudi Arabia and moving even closer to Israel brings risks.
• [New] National Security Advisor John Bolton is reportedly discussing plans for a multinational Arab force-drawing on troops from Saudi Arabia, the United Arab Emirates, Qatar, and Egypt that could replace the U.S. presence.
• [New] Neither Israel or Saudi Arabia can be expected to wait for Iran to acquire nuclear weapons.
• [New] Israel and Saudi Arabia will relish the Trump administration's embarking on a possible confrontation with Iran.
• Middle East and Africa are expected to generate moderate growth led by the Gulf economies of UAE, Saudi Arabia and others.
• Saudi Arabia, Bahrain, Jordan, Oman and the United Arab Emirates are expected to reach a cumulative installed PV capacity of around 22.4 GW by 2023.
• The Middle East and Africa market is expected to be dominated by Gulf economies of Saudi Arabia, UAE, Kuwait, and Qatar.
• If the deal with the US falls through, Iran could increase support for the Houthis, possibly provoking a military response from Saudi Arabia and Gulf allies such as the United Arab Emirates.
• Neither Israel nor Saudi Arabia can be expected to wait for Iran to acquire nuclear weapons before acting.
• A re-imposition of oil sanctions against Iran could put Saudi Arabia under pressure to offer to replace Iranian oil that would be lost to buyers.
• Phosphate prices increased in response to higher sulfur levels in 2 H17, which helped to further support the price rally: in 2018, the increase in capacity in Morocco and Saudi Arabia is expected to negatively impact prices.
• In Saudi Arabia there are mounting geopolitical risks and a worsening oil outlook and lower oil production in the United Arab Emirates (UAE).
• Lower oil prices could set the stage for positive evolution in the Middle East as countries like Saudi Arabia are incentivized to refashion their oil-dependent economies.
• The latest report from the International Energy Agency (IEA) finds American oil production at its highest level in 50 years and projects that it will surpass that of Saudi Arabia and Russia in 2018.
• Saudi Arabia will need Western investment to transform its economy and reduce its dependence on oil revenues.
• OPEC's cuts have taken substantial oil off the market & Saudi Arabia will keep some level of cuts in force regardless of disunity in OPEC.
• Saudi Arabia could play an important role in solidifying an outcome to the power struggle in oil-rich Libya to Moscow's advantage.
• The fear among other producers is that higher oil prices will throw off the delicate balance of supply and demand and drive up US shale production.
• Oil-exporters in the region such as Saudi Arabia have warmed up to renewables with non-fossil fuel based power projects being accelerated rapidly to meet looming targets over the next five years.
• For the GCC as a whole, the IIF expects overall real GDP (gross domestic product) to shift from a contraction of 0.2 per cent in 2017 to a growth of 2 per cent in 2018, supported by the partial recovery in oil prices and government stimulus, particularly in Saudi Arabia.
• Geopolitical risk bearing down on global oil markets is increasingly taking hold and weighing on oil prices as Saudi Arabia and Iran jockey for influence and position in the Middle East.
• United States and Saudi Arabia will open new channels for security cooperation, including launching a trilateral dialogue among the U.S., the Saudis and the United Arab Emirates.

Last updated: 20 May 2018