Liberal Studies: Saudi Arabia and its oil influence [October 30, 2018]

Compiled by Ben Pang
Compiled by Ben Pang |

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The Future Investment Initiative conference, also known as the Davos in the desert was marred by the Khashoggi killing. However, many still attended, such Masayoshi Son (2nd right), SoftBank Group Corp Chairman, CEO and Japan's richest man.

Issue 1

Saudi Arabia is trying to show the world that it’s not a backward, violent, primitive nation, and the new crown prince wants to be seen as a forward-thinking leader. This incident, a person’s death aside, creates massive tension between the Saudi king and Trump.

At stake is a controversial arms deal, in which Saudi Arabia is to buy US$110 billion worth of weapons – some previously kept away from the Middle Eastern country because of their destructive ability. One such weapon was recently used in an air strike on a school in Yemen, which killed 51 people, 40 of whom were children.

Last week, Saudi Arabia hosted an investment summit, where leaders of industry and state finance ministers met to discuss future investments. After Khashoggi’s disappearance, many top names such as JPMorgan Chase CEO Jamie Dimon and HSBC CEO John Flint dropped out. However, many other companies still attended the conference. Chinese firms were active participants, and Chinese leaders have avoided publicly commenting on the Khashoggi murder. 

Saudi Arabia's welcomes first ever Comic Con in a bid to energise the country's young

Richard Harris, Port Shelter Investment chief executive, said that Saudi Arabia still holds dominance over other Opec (Organisation of the Petroleum Exporting Countries) producers. This means that, on a day-to-day basis, the kingdom controls the price of oil.

“For 40 years, it has been smart enough to limit the extreme falls and cap the rises of the oil price,” he wrote. “The country lifts the second-most barrels of oil daily [after the US] and produces a third of Opec’s output. The nation’s main export is critical for economies like China and India – 40 per cent of the world’s population. Russia and the US may have oil themselves, but they are still Opec price-takers.”

Harris says that every country – Russia, China, the US, and the rest of the world – needs Saudi political stability. “A civil war  would devastate global oil production. If one of the Muslim fundamentalist groups took power, that would surely lead to a regional Gulf war and would be the catalyst for the mother of all global economic crises.”

Who is Saudi writer Jamal Khashoggi and what happened to him?

Trump has promised severe punishment if it is proven that Saudi Arabia has indeed carried out this awful deed, but no one is quite sure as to what that might be. The US is heavily dependant on the Saudis for much of its imported oil. The price of oil may be very unpredictable while this crisis plays out.

Turkey has been very careful not to directly accuse Saudi Arabia of this crime. Instead, information has been leaked to Turkish government media, saying they have video and audio recordings of Khashoggi being questioned, killed, and his body cut up.

Question prompts:

What has been the attitudes of different countries to the death of Khashoggi?

What would be the effects of Saudi political instability?

Read Part 1 here

Read Part 3 here