Oil price climbs on Saudi Arabia's purge
Dozens of princes, ministers and prominent businessmen have reportedly been arrested as part of an attempt to tackle corruption in the kingdom. The FT's oil & gas correspondent Anjli Raval tells Daniel Garrahan how the purge is affecting the oil price.
Produced by Alessia Giustiniano. Filmed by Rod Fitzgerald. Edited by Filip Fortuna.
Oil hits a fresh two-year high on Monday after the arrests over the weekend of at least 11 Saudi Arabian princes and dozens of senior officials and businessmen. The purge was part of the country's new anti-corruption commission.
Our oil and gas correspondent Anjli Raval joins me now. Anjli, let's start with the arrest. There were some pretty high profile thing is involved there, weren't there?
Yes, there was. I mean, the biggest name, particularly for us at the Financial Times is Prince Al-Waleed bin Talal, who is one of the world's richest people. He's invested in lots of big-name companies from Twitter to Lyft, also Citigroup.
But then you also have a stream of other business elite, both ministers, former ministers, and big-name royals. Ibrahim Al-Assaf, who was a former finance minister-- and he's actually a board member of the state energy giant Saudi Aramco-- was also one of the people, it's been reported, that was arrested.
So you mentioned Prince Al-Waleed--
--who has some stakes in some big, multinational corporations. What does going after such high-stake individuals mean for the kingdom and the investment climate around it? How does it change things?
I mean, one of the things that some people have been saying, that, look, this is a massive campaign against established business leaders, which doesn't really foster an environment of confidence. But at the same time, Prince Mohammad, the crown prince, who really has been sort of consolidating his power here-- he's been on this sort of big anti-corruption and transparency agenda.
So on the one hand, he's doing that. But on the other hand, this might just intensify sort of capital flight. You are trying to do this at a very critical time. The kingdom is trying to diversify its economy, get investment from other sources, and push into other industries. And also, let's remember, this is at a time they're trying to launch this big IPO of Saudi Aramco.
So whirlwind change at a sort of huge moment for the kingdom. How has this been viewed internationally? How has it affected, say, the oil price, for example?
So with the oil price, obviously any sort of political uncertainty, particularly in the world's biggest oil exporter, is going to be viewed extremely closely. So today, oil prices have gone up to a fresh two-year high of above $62 a barrel.
But we have to look at the bigger picture. Prince Mohammad, who is ultimately in charge of oil affairs in the kingdom, has been pushing oil policy in a particular direction. And in fact, if he is going to be consolidating his power, as I said, it doesn't look like that strategy will shift. In fact, he'll have more confidence.
So for example, at this month's Opec meeting, the strategy to continue cutting oil production as part of a broader agreement among world producers will likely to continue.
So this is all been done behind the facade, let's say, of an anti-corruption crackdown. But like you already alluded to, is this really about MBS and his consolidation of power? And can we may be read into this that the king may be preparing to abdicate?
There's been lots of rumours for sort of months, in fact, that the king will abdicate. But we never really know about these things. What we can say is that this was an extremely political move. And we can be left with no doubt that Prince Mohammad has this very ambitious strategy of going about enacting reform across the kingdom on the political front, social front, on the economic front.
And he really is trying to tell the world, look, this is the way I want to do things. And I'm going to win. And that's what has come out here very, very clearly.
And it's quite interesting, because you've now gone from just two weeks ago, when I was in Riyadh with my colleague Simeon we had a slightly different kind of Prince Mohammad on show. He was talking about a more moderate Islam. He was talking about a more relaxed social environment within the kingdom. And just within weeks now, you've got this big, big purge of very, very influential people.
Anjili, thanks very much.