Saudi strategy runs deeper than cuts

Saudi Arabia’s production restraint may boost prices in the short term, but it may also assure the Kingdom greater market control in the longer term

Saudi energy minister Prince Abdulaziz bin Salman presented his early January announcement that the Kingdom would reduce its oil production by 1mn bl/d during February and March as a “gift” to the oil industry. And oil price bulls certainly reacted as if they had received a present as the market roared above $50/bl. But the decision, taken by Prince Abdulaziz’s brother Crown Prince Mohammed bin Salman (MbS), is also part of a longterm outlook designed to ensure oil price stability in a range that will allow Saudi Arabia to proceed with megaprojects under the wide-reaching Vision 2030. With oil revenues providing around SAR100bn ($27bn) less than was budgeted in 2020—c.53.5pc of the total—Riy