HOUSTON — It probably won’t happen. But if Saudi Arabia faced the same turmoil as other Middle Eastern countries, it would be disastrous. And that’s what’s got people attending an international energy conference here talking.
“If Saudi Arabia were to become unhinged, the consequences are almost impossible to imagine—politically, economically, at every level,” said Ryan Crocker, who was the U.S. ambassador to Iraq until 2009. “But I don’t see it happening.” Crocker spoke to reporters after keynoting a morning speech on Wednesday during the 30th annual Cambridge Energy Research Associates conference.
Talk of Saudi Arabia and its integral role in the oil industry has surfaced this week as the small oil disruption from the Libyan unrest sparked fears in the market and spiked prices. The ultimate fear is that if turmoil erupts in Saudi Arabia, it would lead to disruptions in oil supply, even though that seems unlikely. It is the world’s largest oil exporter and home of the world’s largest reserves. It’s also the most influential country within the Organization of Petroleum Exporting Countries, which supplies 40 percent of the world’s oil.
Anxiety about the country’s stability is mounting ahead of a massive protest planned for the nation’s capital, Riyadh, on Friday. Thousands of Saudis have signed onto groups on social networking sites like Facebook calling for the protest, known as a “Day of Rage.” Another one is planned for later this month.
In panel discussions and keynote speeches, experts here have been talking about Saudi Arabia as part of the larger picture of the Middle East unrest and the oil industry. And over lunch and dinner tables at CERA, chatter turns to the “what if” scenario.
What if Saudi oil were taken out of the equation? Even the remote possibility would send the global market reeling.
“If you take it out of the equation, if something happens and the Saudis shut down, you’re looking at $500 [per-barrel] oil,” oil tycoon T. Boone Pickens told National Journal Daily in a phone interview from Dallas. Pickens, like all other experts interviewed, said it was unlikely.
Apart from being the world’s biggest exporter, Saudi Arabia also has nearly all the world’s spare reserves.
“There is hardly any spare capacity outside Saudi Arabia to make up for any disruption within Saudi Arabia,” Guy Caruso said at CERA. Caruso serves as senior adviser in the Energy and National Security Program at the Center for Strategic and International Relations. “They’re the main buffer we have. And a little bit there and a little bit here is trivial to what Saudi Arabia has.”
One key Middle Eastern leader signaled confidence that Saudi Arabia would easily weather the protests.
“I am confident about the stability of Saudi Arabia,” said Youcef Yousfi, minister of energy and mines for Algeria. “I am confident of the stability of exports of oil of Saudi Arabia. I don’t think there will be a disturbance in production of exports.”
Another key international oil expert said he expects even amid unrest within in its own borders, Saudi Arabia would continue exporting oil. “I think they will keep on putting more oil in the market,” said Rene Ortiz, who was inspector general of OPEC from 1979 to 1981.
A major uprising within Saudi Arabia probably wouldn’t happen, experts say, because the country is different than the other three Middle Eastern countries—Tunisia, Egypt, and Libya—that have had uprisings. King Abdullah is more well-liked by his people than the leaders in those nations, and Saudis have a wealthier population. The Saudi government has more money to spend on its people. (Late last month Abdullah promised $36 billion in new benefits.)
“A lot of attention has been paid to responding to the popular needs, and an awful lot of political networking is going on primarily led by King Abdullah,” said Crocker, who also served as a U.S. ambassador to Pakistan, Syria, Kuwait, and Lebanon. “Where they do have a challenge is with their own youth bulge.”
Indeed, the $36 billion Abdullah announced several weeks ago is going mostly to its young people.
The uprisings in the other countries have largely started with young people calling for new leadership. Relatively small protests have been occurring in Saudi Arabia in recent weeks amid the regional turmoil.
“There is a certain infectious quality to all of this,” Crocker said. “So we may see demonstrations in the kingdom, but I wouldn’t see that in itself as a serious concern.”
This article appears in the March 10, 2011 edition of NJ Daily.