02:58 GMT +324 March 2017
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    Saudi Defence Minister Prince Mohammed bin Salman bin Abdul Aziz al-Saud

    Norwegian Economy at the Mercy of Saudi Prince

    © AFP 2017/ ALAIN JOCARD
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    Oil in Turmoil (123)
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    As one of Europe's largest producers of oil, Norway is deeply dependent on international oil prices. So far, Saudi Arabia's gambling with oil prices has had fateful consequences for Norwegian economy. Today, an ambitious Saudi prince is about to decide the future of Norwegian welfare.

    Despite its sturdy economy with high standards of living, Norway was hit hard by the recent years' oil slump, with ballooning unemployment and substantial capital losses. Few people will mean more to the Norwegian economy in 2017 than Prince Mohammad bin Salman of Saudi Arabia, columnist Christina Pletten wrote in Norwegian daily Aftenposten.

    As the world's largest oil producer, Saudi Arabia has in recent decades kept its hand on the faucet to control international oil prices by increasing or cutting production at will. Of late, Mohammad bin Salman has been pulling all the strings.

    "Saudi Arabia has historically been a bit like 'the world central bank' for oil," Thina Saltvedt, oil analyst at financial services company Nordea, told Aftenposten.

    With its recent drive to pull down the oil prices, the Saudis tried to kill two birds with one stone: first, drive a wedge between the nascent alliance between Russia and Iran, and, second, strangle new shelf oil producers from the US, which have been betting on high prices.

    However, the low prices resulted in a dramatic economic decline in major oil-producing countries, such as Venezuela and Norway. Ironically, Saudi Arabia had a chance to taste its own medicine. An economic crisis may soon have a destabilizing effect on the Saudi economy, which is why Saudi Arabia is bound to turn on the tap again.

    To keep oil prices down, Mohammad bin Salman must force other OPEC members to actually comply with the cuts they have promised to implement, which is never easy, Saltvedt pointed out, venturing that multiple OPEC members are likely to dodge their previous commitments.

    "A steady Saudi Arabia is vital to prevent turbulence in oil prices. But once they have lost part of their power, and as other forms of energy will be cheaper, they will lose their grip further," Saltvedt explained.

    Mohammad bin Salman is formally the third most powerful person in Saudi Arabia, after his father, King Salman bin Abdulaziz al-Saud, and his cousin, Crown Prince Mohammad bin Nayef. Over the past year, however, he took increasing control over Saudi Arabia's most important institutions. In 2016, he launched plans to ensure that the oil-driven economy keeps its legs in the future.

    Prince Mohammad, who has consolidated more power than anyone in his position since the founding of the Saudi kingdom in 1932, voiced plans to create a $2trln Saudi post-oil wealth fund, which would make Norway's own oil fund with its "mere" $850bln pale in comparison. As Defense Minister, Prince Mohammad leads the Saudi military effort in Yemen; he also oversees ministries including finance, oil and economy.

    Topic:
    Oil in Turmoil (123)

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    oil crisis, OPEC, Saudi Arabia, Scandinavia, Norway
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    • avatar
      professor.hornblow
      Blame the US for starting the oil war in an attempt to bring down Russia. It failed and countries like Norway, Venzuela and even the US shale producers are suffering. The sands are shifting under the Saudi regime; it will either collapse or be ripped apart in a civil war.
    • avatar
      Yaffle
      To keep oil prices DOWN, production must be RAISED. That is what Saudi Arabia did at the behest of the USA to damage the oil-dependent economy of Russia. Recently, OPEC and non-OPEC countries have agreed to restrict production in the hope that this will push up the price of oil (and gas). If the price rises too much then shale oil production will once again become profitable and thus affect supply. However, shale oil producers will seek to avoid any glut since that bring the price down. Far from any 'free market', oil and gas prices are highly politicised and part of the waging of global warfare.
    • avatar
      michael
      troubled waters indeed for both, the norwegians and the saudis.
    • avatar
      deshepherdishere
      Bollocks. This is a cartel & if Norway cannot benefit from fixed high prices so much the better.
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