Here in the Australian city of Brisbane, where the annual G20 Summit is being held, all eyes were set on the speech by Crown Prince Salman Bin Abdulaziz, who is heading Saudi Arabia’s delegation on behalf of the Custodian of the Two Holy Mosques, King Abdullah Bin Abdulaziz. The summit comes as oil prices hit a four-year low, below 77 US dollars per barrel. And if predictions by the International Energy Agency are right, the price slump is set to continue. The G20 will not be able to support global growth whether oil prices sharply rise or fall. How did Saudi Arabia deal with this major concern that coincides with the world’s most significant summit? In my opinion, three highly significant messages came out of the Crown Prince’s speech on Saturday regarding the world’s oil markets.
The first message is that his country will continue its balanced policy and its influential and positive role in solidifying the stability of energy markets, while taking into account the interests of both producer and consumer countries. Had not Saudi Arabia adopted this policy, the world would not have recovered from its stumble after the global financial crisis of 2008 and the subsequent hikes in oil prices which hit 150 dollars per barrel.
The second message confirmed that Saudi Arabia has no enmity toward alternative fossil fuels, which contribute to the balance of global energy markets and ensure supply. That is, Riyadh confirmed that fossil oils are not a competitor to traditional crude as much as an addition to the world’s energy needs.
The third main message from the speech covered state subsidies on energy products and their impact on the overall financial situation. The Crown Prince reminded his listeners of a national program his country is setting up to rationalize energy use and boost its efficiency. Everyone knows that government subsidies for petroleum products must one day stop; it could be tomorrow, next year, or in five years’ time. The day will come when subsidies are scrapped, or at least reduced. For instance, in Saudi Arabia subsidies go to the rich and poor. In fact, those who do not deserve subsidies benefit from them far more than those in need.
A leader and a safety valve for world oil markets, as well as a determiner of the course of the global economy, Riyadh says it is not dealing with a commodity that will run out in five years. Rather, oil is a commodity that the world will need for at least 50 years to come. Therefore, dealing with oil markets requires a vision that takes into account the interests of producer and consumer countries, and, certainly, those of the global economy. Over the decades, Saudi Arabia has confirmed its wise and discreet leadership of oil markets, refraining to put its interests as a state above those of the global economy. Imagine if Iran or Venezuela were leading the oil markets!
It remains to point out that Saudi Arabia is not representing any country other than itself at the G20. However, the Kingdom has grown accustomed to reflecting the interests and concerns of developing countries in general and the Arab world in particular. I do not think there is a country that is capable of understanding the issues of the developing world more than Saudi Arabia.