It was only three months ago that Saudi Arabia’s petroleum and resources minister Ali al-Naimi, in response to growing concerns about the US surpassing the Kingdom to become the world’s top energy producer before the end of the decade, claimed that his country welcomed the development.
From OPEC’s headquarters in Vienna, Austria on May 31, al-Naimi argued that an increase in US-produced crude would actually stabilize global markets, dismissed reports about the inevitable end of US reliance on imported crude as “naïve and simplistic,” as it did not take into consideration “inter-linked markets.” The minister sounded extremely confident, going as far as to compare the talk of US energy-independence to the formerly fashionable “peak oil” argument.
On Sunday, however, Prince Alwaleed bin Talal, perhaps one of the most well-known personalities of the expansive al-Saud clan that has ruled the Arabian Peninsula since the country’s inception in the earlier half of the last century, took to Twitter, a company in which he owns stake, to warn his country that it is not taking the US “energy revolution” seriously enough.
The Prince’s tweeted letter was written in Arabic, highlighting the fact that it was indeed a direct response to the minister’s remarks only two months prior. The Prince contradicted Naimi in two crucial ways. First, by asserting that the enormous increase in US shale gas production, facilitated by new and sophisticated technologies that have opened up previously untouchable reserves deep within shale rock formations or miles under the sea floor, was indeed an “inevitable threat” to the Kingdom.
The more direct part of bin Talal’s response, however, came in the form of his warning that under the current circumstances, the Kingdom would fall short of its 15 million barrels-per-day production goal. OPEC, the Organization of Petroleum Exporting Countries, has already forecasted that global demand for its basket of crudes will drop by 300,000 barrels a day by next year. The Prince, one of the world’s richest men though his exact ranking has been a matter of controversy, was unequivocal in saying that the ongoing decline in Western dependence on crude is a reality that “is known by everyone.” In his letter, he also entreated the elderly King Abdullah to drastically increase Saudi investment in renewable energy sources.
The Prince’s arguments are buttressed by a tangible decline in Saudi crude production. The country pumped 9.47 million barrels a day of crude this past June, down from 9.83 million the previous year. Currently, lesser demand from the West, especially from the US, has yet to hit the Kingdom’s balance sheet as Asian demand has and will to some extent make up for the losses.
For all of the religious fervor and puritanism upon which the al-Saud family has established the country, controversy among the royals is typical fodder for tabloid news, particularly in the Middle East. Public airing of political/policy disagreements within the House of Saud are far less common, however, and this most recent incident is likely a sign that there is significant disagreement within the royal ranks about how to approach oil policy
That these disagreements are spilling out into the open indicate that concerns about the country’s oil production are taking on an existential dimension. With protests throughout the region going on almost three years at this point, the government has cracked down hard on any signs of dissent at home, particularly in the Eastern oil-rich region of al-Qatif. But this posture towards civil unrest has extended beyond the Kingdom's borders, to nations such as Bahrain, where over 1000 Saudi troops were deployed not so long ago to brutally crush massive protests against the small island-fiefdom's ruling al-Khalifa family.