© 2024 WFAE

Mailing Address:
8801 J.M. Keynes Dr. Ste. 91
Charlotte NC 28262
Tax ID: 56-1803808
90.7 Charlotte 93.7 Southern Pines 90.3 Hickory 106.1 Laurinburg
Play Live Radio
Next Up:
0:00
0:00
0:00 0:00
Available On Air Stations

How Saudi Arabia is using its oil influence to fund fantastical plans for the future

A MARTÍNEZ, HOST:

Saudi Arabia is facing increasing levels of scrutiny over its efforts to buy into professional sports leagues around the world. What some critics call sportswashing is a strategy Crown Prince Mohammed bin Salman embraces as he seeks to diversify Saudi Arabia's economy. Darian Woods and Adrian Ma of The Indicator from Planet Money explain how the Saudi government plans to use oil to fund the crown prince's vision for the future.

DARIAN WOODS, BYLINE: If you know one thing about Saudi Arabia's economy, it's that it has oil, which is very easy to extract.

RICHARD BRONZE: Probably the cheapest at scale.

WOODS: Richard Bronze is the head of geopolitics at Energy Aspects, which is an oil and gas consultancy.

BRONZE: If you look at something like U.S. shale, you're probably talking somewhere in the 30 to $50 a barrel for most shale, but it's a few dollars a barrel it probably costs...

WOODS: Wow.

BRONZE: ...For a lot of Saudi production.

ADRIAN MA: And because of this cheap-to-produce oil, Saudi Arabia's been one of the most important suppliers of oil. In 1981, Saudi Arabia was selling the world about one in every six barrels of oil out there, and that made it the third richest country in the world per person, after the United Arab Emirates and Qatar.

WOODS: But Saudi Arabia doesn't just accept what the world market is willing to pay for its oil. It actually tries to influence what that price is.

MA: By sometimes restricting how much oil it produces, Saudi Arabia hopes that this will make the global oil market bid higher prices for the oil it does produce. Consumers would see higher prices at the gas station, and this potentially means Saudi Arabia can make more money overall. But recently there's been one player stopping OPEC and Saudi Arabia from being able to control the oil market too much.

WOODS: We're talking about the U.S. Over the last decade, U.S. oil production has been booming. And the U.S. is now the No. 1 producer of oil. The U.S. isn't part of OPEC. So when OPEC cuts its oil production at the moment, the U.S. oil at least partly makes up for that gap. But look, if you're an oil-dependent country like Saudi Arabia currently is, relying on oil is not a recipe for long-term prosperity. Because the oil market is volatile.

MA: And of course, all this is a concern for Crown Prince Mohammed bin Salman. In 2016, he announced a plan to diversify Saudi Arabia's economy.

WOODS: Here he is recently talking about it on Fox News.

(SOUNDBITE OF ARCHIVED RECORDING)

CROWN PRINCE MOHAMMED BIN SALMAN: We have in the past a few issues in Saudi Arabia and a lot of opportunities that we didn't use. We're trying to capture that and to go forward for a better Saudi Arabia. And that's what we're trying to do.

WOODS: His big plan is called Vision 2030. Richard Bronze calls it an ambitious strategy.

BRONZE: It talked about, you know, really boosting lots of the non-oil sects for the Saudi economy - boosting tourism, boosting technology, green investment and lots of kind of changes culturally, a lot of loosening up of some of the traditional restrictions. So you have things like building this futuristic city called Neom.

WOODS: And in some ways, Mohammed bin Salman is hoping that Neom can be an answer to Dubai and the United Arab Emirates.

BRONZE: There's really interesting tensions between Saudi Arabia and the UAE. Overall, they are close allies. But below that, you know, one of the things, for instance, is Saudi Arabia's doing a big push for international companies to move their regional headquarters to Saudi Arabia. Most of them today are headquartered in Dubai or Abu Dhabi.

WOODS: But Vision 2030 isn't all about these improbable buildings in a shiny desert city. It's also a goal to generally build the non-oil economy. It calls for more women in the workforce, more investment in and out of the country. And it's this focus on a mobile, outwardly focused economy that may have driven Saudi Arabia's talks last year to normalize relations with Israel. That was a huge step because Saudi Arabia hasn't recognized Israel in the past. Of course, that big breakthrough was derailed by the Israel-Hamas war.

MA: Last week we had Antony Blinken, the U.S. secretary of state, visiting Mohammed bin Salman in Saudi Arabia. He was there to talk about the conflict. And that's because Blinken recognizes that regardless of Saudi Arabia's economy in transition, Saudi Arabia remains a country with a lot of power in the region.

WOODS: Darian Woods.

MA: Adrian Ma, NPR News. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Darian Woods is a reporter and producer for The Indicator from Planet Money. He blends economics, journalism, and an ear for audio to tell stories that explain the global economy. He's reported on the time the world got together and solved a climate crisis, vaccine intellectual property explained through cake baking, and how Kit Kat bars reveal hidden economic forces.
Adrian Ma
Adrian Ma covers work, money and other "business-ish" for NPR's daily economics podcast The Indicator from Planet Money.