Everything at Doha was about politics. After taking over defense and economic planning, Saudi Arabia’s Deputy Crown Prince Mohammed bin Salman has now stamped his authority over oil policy.In so doing, the 30-year-old son of King Salman upended the Saudis’ decades-long approach of separating commercial from political considerations. Over the weekend, Saudi officials revoke an agreement among major oil producers in Doha to freeze output due to Iran’s refusal to participate, a sign the regional rivalry is infecting the market.The fact that Saudi Arabia seems to have blocked the deal is an indicator of how much its oil policy is being driven by the ongoing geopolitical conflict with Iran,” said Jason Bordoff, director of the Center on Global Energy Policy. That approach drove talks among Russia, Saudi Arabia, Venezuela and Qatar to agree to freeze oil production in recent weeks. As late as Saturday, officials from the four countries prepared a draft that they expected to be rubber stamped hours later by oil ministers in Doha. The deal would have marked the first collaboration between the Organization of the Petroleum Exporting Countries and Russia in 15 years, opening the door to the end of a glut that has driven oil prices from $100 a barrel to as low as $26.
It didn’t go according to plan. Instead, by Sunday morning, the Saudis insisted on the inclusion of Iran in any deal. “Some countries from OPEC changed their positions in the morning — right before the meeting began,” Russian Energy Minister Alexander Novak said after the talks in Doha broke apart.In fact, the U-turn was telegraphed weeks before the gathering. Prince Mohammed bin Salman, known in diplomatic circles as “MbS” and the emerging force in economic policy within the kingdom, said in two interviews that the participation of Iran was necessary for any deal. Prince Mohammed has accumulated power since his father’s ascension to the throne last year. He became defense minister and soon after launched a military campaign in Yemen. He also chairs the top economic planning body and the council that has authority over the kingdom’s giant state-owned oil company.
One is protecting Saudi Arabia’s oil-market share, which could be eroded if it froze production as Iran increased exports following the removal of sanction in January. The other is avoiding a sharp increase in oil prices, which could throw a lifeline to rival suppliers in the U.S. and also slow down the kingdom’s agenda of domestic reforms.
“We don’t care about oil prices,” Prince Mohammed told reporters last week. “$30 or $70, they are all the same to us. We have our own programs that don’t need high oil prices.”