ByLucy Cormack
June 12, 2023 —
Marathon talks between the world’s biggest oil-producing nations in Austria saw Saudi Arabia commit to cut oil production by 1 million barrels a day in July – a unilateral stab at stabilising a volatile oil market.
The unexpected announcement following the meeting of the Organisation of the Petroleum Exporting Countries (OPEC) last weekend was made against a backdrop of slumping oil prices, the war in Ukraine and soaring global inflation.
Saudi Arabia is cutting oil production by 1 million barrels a day, taking it to its lowest level in several years.CREDIT:AP
The International Monetary Fund suggests Saudi Arabia needs oil above $US80 a barrel to fund its pipeline of multibillion-dollar “giga-projects” at the centre of Crown Prince Mohammed Bin Salman’s Vision 2030 strategy.
But the kingdom is trying to talk a fine balance – keeping oil prices high, even as it looks to remake itself in a post-oil-dependent future.
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Saudi Arabia’s ambitious blueprint includes a plan to transform hundreds of kilometres of Red Sea coast into a climate-controlled future city, called Neom.
“There is a lot of spending going into these grandiose projects,” said Kate Dourian, a non-resident fellow of The Arab Gulf States Institute in Washington.
“Presumably, the reason for the unilateral [oil production] cut is a test to see how it affects price. And if it does, then that will probably be extended.”
Vision 2030 is the crown jewel in the kingdom’s diversification plan, as it works to project a new image – recasting its reputation and boosting non-oil private sectors.
At the end of an inaugural two-day visit to Saudi Arabia on Thursday, US Secretary of State Antony Blinken said the “historic” plan was in the kingdom’s interests in pursuing modernisation, “including the expansion of human rights”.
Saudi Foreign Minister Prince Faisal bin Farhan said the kingdom had gone through a “significant reform process” but the government was driven by “the needs and desires of the Saudi people”.
“We are always open to having a dialogue with our friends, but we don’t respond to pressure. When we do anything, we do it in our own interests,” he said.
NEOM: The Line future-city, a centrepiece of the Vision 2030 strategy for Saudi Arabia.
The kingdom’s hopes don’t just rely on nation-building at home.
Harnessing the soft-power of sport is another area Riyadh has set its hopes on.
At the core of Vision 2030 is Saudi Arabia’s flex to woo the world’s most popular sports – and its stars – into its orbit, with billions already being pumped into football, golf, Formula 1 racing and pro-wrestling.
There is money to be made, as shown by Qatar’s 2022 FIFA World Cup,
CREDIT:WORLD CUP AUTHORITY
Sporting event revenue has grown by an annual 8 per cent since 2018, and is forecast to reach $3.3 billion next year, according to global consultancy EY.
From a global sports industry worth somewhere in the region of about $750 billion – 40 per cent of which is accounted for by the US – there is money to be made, as shown by Qatar’s 2022 FIFA World Cup, cricket in Dubai and Abu Dhabi’s annual Rugby Sevens tournament.
“We’re talking about countries that are hugely dependent upon oil … having to think about what else they can do,” said Simon Chadwick, a geopolitics and economics professor at SKEMA Business School.
“Whether it’s football, cricket, rugby or the Olympics; it’s a global language. It transcends lots of other things.”
This week’s stunning announcement that the LIV Golf tournament owned by Saudi’s $980 billion wealth fund would finally merge with the PGA Tour and Europe’s DP World Tour was a win for the kingdom.
With the merger to form a new global golf entity, Saudi Arabia acquired its desired sporting legitimacy, Chadwick said. “It’s no longer an outsider – it’s at the top table.”
Dr Anas Iqtait, lecturer in Middle East economics at the Australian National University, said the pursuit of international sporting legitimacy sought to reshape the nation’s global image as a destination for sport, business and investment.
LIV Golf chief executive Greg Norman, Saudi Arabia’s Public Investment Fund governor Yasir al-Rumayyan and PGA Tour commissioner Jay Monahan.
Sporting event revenue has grown by an annual 8 per cent since 2018, and is forecast to reach $3.3 billion next year, according to global consultancy EY.
From a global sports industry worth somewhere in the region of about $750 billion – 40 per cent of which is accounted for by the US – there is money to be made, as shown by Qatar’s 2022 FIFA World Cup, cricket in Dubai and Abu Dhabi’s annual Rugby Sevens tournament.
“We’re talking about countries that are hugely dependent upon oil … having to think about what else they can do,” said Simon Chadwick, a geopolitics and economics professor at SKEMA Business School.
“Whether it’s football, cricket, rugby or the Olympics; it’s a global language. It transcends lots of other things.”
This week’s stunning announcement that the LIV Golf tournament owned by Saudi’s $980 billion wealth fund would finally merge with the PGA Tour and Europe’s DP World Tour was a win for the kingdom.
With the merger to form a new global golf entity, Saudi Arabia acquired its desired sporting legitimacy, Chadwick said. “It’s no longer an outsider – it’s at the top table.”
Dr Anas Iqtait, lecturer in Middle East economics at the Australian National University, said the pursuit of international sporting legitimacy sought to reshape the nation’s global image as a destination for sport, business and investment.
LIV Golf chief executive Greg Norman, Saudi Arabia’s Public Investment Fund governor Yasir al-Rumayyan and PGA Tour commissioner Jay Monahan.
CREDIT:GETTY
“This redefined image is a significant factor in attracting foreign direct investment, which is integral to the successful implementation of the kingdom’s 2030 vision.”
While Saudi Arabia will bid to co-host the 2030 FIFA World Cup, alongside Greece and Egypt, there are also hints it is eyeing an American NBA or NFL franchise.
Sport has long held currency in geopolitics, Chadwick argues, pointing to colonial era Great Britain’s deployment of sport around the Empire in the 18th and 19th centuries. But he says its value has clearly escalated.
“We’re now beginning to see sport being used for diplomatic purposes … sport being used for the purposes of nation-branding and soft power projection.”
With Reuters
“This redefined image is a significant factor in attracting foreign direct investment, which is integral to the successful implementation of the kingdom’s 2030 vision.”
While Saudi Arabia will bid to co-host the 2030 FIFA World Cup, alongside Greece and Egypt, there are also hints it is eyeing an American NBA or NFL franchise.
Sport has long held currency in geopolitics, Chadwick argues, pointing to colonial era Great Britain’s deployment of sport around the Empire in the 18th and 19th centuries. But he says its value has clearly escalated.
“We’re now beginning to see sport being used for diplomatic purposes … sport being used for the purposes of nation-branding and soft power projection.”
With Reuters
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