BY: JOSE LUIS CHALHOUB NAFFAH
Much has been told and narrated by global media outlets about the sad and despicable killing of journalist Jamal Khashoggi, who was critical of the Saudi monarchy. His death has been exploited for political and geopolitical gains by Turkey, where Erdogan used it to improve his position in the region. Turkey has a lot to gain from the attention, including an attempt to try to keep the economy as well as Turkish finance and currency afloat after the recent turmoil experienced by the Lira.
On the other hand, as the global outcry and accusations pile up against the Crown Prince Mohammed bin Salman (MbS), the Saudi crown rushed efforts directed mainly by King Salman and the Saudi oil minister to portray an image of calmness in the oil markets alongside political stability in the kingdom. The Saudi monarchy promised punishment and consequences for the material perpetrators of the killing, even discussing curtailing the Crown Prince’s powers.
Khalid Al Falih, Minister of Energy, Industry and Mineral Resources of Saudi Arabia, stated specifically that the Saudis won’t use oil as a political weapon, a showing of general political and business pragmatism. The event has clearly spurned fear from Saudi elites that this event could, in one way or another spiral out of control, in part because of the inner political dilemmas and the clash for power in the House of Saud, centered especially around the already polemic figure of Mohammad bin Salman.
In terms of consequences for the global oil markets, this event initially caused fears of spikes in prices of the WTI and Brent benchmarks. The speculation was hinged on the prospect of U.S. sanctions prompting retaliation leading to a potential disruption of oil supplies. But those fears were assuaged after Saudi oil authorities confirmed that they aim to boost production in the coming months. Saudi Arabia’s announcement along with Iran sanctions being reinstated prompted a crash in oil prices. The announcement to boost production, at the end of the day, was a calculated move by the Saudis to show that they still hold considerable weight in oil markets. In sum, the Al Saud family is showing that they want to keep their market share, but without discarding its deals and traditional alliances, especially with the U.S. currently involved in oil and arms purchases.
Erdogan, in this instance, is looking to gain as much political and economic clout out of this ordeal as possible, and he is willing to do it through political blackmailing. Erdogan has aimed to portray an image of Turkey as a protector of human rights and freedom of the press, simply because this event occurred on Turkish soil. In general, the longstanding religious and geopolitical differences between Ankara and Riyadh are known, and based on Erdogan’s Ottoman revival strategy in the Middle East, this was a clear chance to advance his own agenda by going toe-to-toe with a heavyweight power broker and oil producer in the region. Notwithstanding Erdogan’s efforts to bring the assailants of the Khashoggi murder to justice, his motives are merely calculations on a geopolitical chessboard.
Khashoggi’s sad demise, which has served for global media delight through the myriads of speculation and gory visuals, has shown that world oil markets overall have not reacted in a bullish way and markets don’t mind much about human sensitivities. The event is also reflective of an ironic tit for tat between state actors, who have made their own accusations of human rights violations despite being known for not having the best human rights records.
Geopolitically speaking, Saudi Arabia has shown that it is still a player of weight in the region, at least within the GCC after the majority of monarchies showed their support for the Saudi kingdom, although it’s still to be seen how Turkey will fare after this, especially if it will secure the backing of Russia and the U.S.
Jose L. Chalhoub Naffah is an oil and political risk analyst based in Venezuela. He has over 13 years of experience in the Venezuelan oil and gas industry and now works as a freelance consultant and advisor on oil and political risks for businesses and investors. Mr. Chalhoub is a political scientist and with a Masters in International Politics and Oil Trading. He is also proficient in Russian, English, French and Arabic, along with Spanish as his mother tongue.
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