What happened in Saudi Arabia

Some observers regard recent events in Saudi Arabia as a decisive step towards consolidating power within the framework of the program of radical economic and social reforms, which is defended by the 32-year-old Crown Prince Mohammed bin Salman.

What happened in Saudi Arabia?

In the evening on Saturday, November 4, King of Saudi Arabia Salman ibn Abdul-Aziz Al Saud issued a decree on combating corruption. The king expressed his intention to put an end to the abuse of the power elite.

According to Al Arabiya, 11 members of the royal family, dozens of ministers and businessmen were detained, only about 50 people were detained. All of them are accused of corruption, and their assets have been frozen.

Among those arrested are Prince Al-Walid bin Talal, the billionaire and nephew of the king, who is considered to be a kind of Warren Buffett in the Middle East. Prince owns King Holding Co., he is well known in international investment circles thanks to investments in Citigroup (NYSE: C), eBay (NASDAQ: EBAY), Twitter (NASDAQ: TWTR. NASDAQ), Apple (NASDAQ: AAPL) and Lyft . Forbes estimates the state of the prince at $ 18 billion.

On Sunday, Prince Mansur bin Mukrin was killed in a helicopter crash near the border with Yemen. Bin Mukrin is the son of the former Crown Prince Muhammad bin Nayef. It was reported that after the successor shift Nief was limited.

What do these events mean?

Some observers interpret them as strengthening the strength and influence of Mohammed bin Salman, who begins radical reforms.

Such rapid and significant changes in the regime are not typical for one of the richest countries in the world. "The policy of the Saudi royal house has shifted from a consensus to an unstable bloody rivalry," said WSJ George Bruce Riedel, a senior fellow at the Brookings Institution and a former CIA official.

Helima Croft, Head of Strategy for Product Markets at RBS, believes that recent events in Saudi Arabia are unprecedented - at least in recent history.

"Now the situation is unpredictable," Croft said. According to her, the Saudi royal family since 1975, as a rule, adheres to the power structure based on consensus. "It's different than anything we've seen before," Croft noted.

Who is Mohammed bin Salman?

Prince Mohammed bin Salman is the son of the current Saudi King Salman, in June this year he was officially proclaimed heir to the throne. The Prince is considered an ambitious and aggressive leader who wants to strengthen his authority in anticipation of his father's soon retirement.

It is expected that under the leadership of Prince Mohammed, Saudi Arabia will begin the next stage of development, which implies a reduction in the country's dependence on oil. Earlier, the prince presented the program Vision 2030, the key aspect of which will be the placement on the exchange of shares of state-owned oil company Saudi Aramco. The funds received are planned to be invested in the development of other sectors of the economy.

Can news from Saudi Arabia destabilize markets?

At the beginning of the week, oil prices jumped sharply, in the morning the price of the barrel of Brent exceeded the level of $ 64 for the first time in two years. By midday on Tuesday, prices began to correct, as a result of r 13:55 MSK futures for Brent crude oil (ICE: B) are down 0.2% to $ 64.14 per barrel. The American WTI (NYMEX: CL) by this time increased by 0.03% to $ 57.37.

"The rise in prices is a reaction to uncertainty in Saudi Arabia, Brent crude tends to the maximum since July 2015," said General Director and founder of Sun Global Investments, Marketorch, Mihir Kapadia.

Jason Tuvi, an economist in the Middle East at Capital Economics, wrote in a review that he said on Monday in a study that the latest developments in Saudi Arabia threaten to lead to abrupt market movements if it turns out that the country is moving away from the usual policy of consensus in power.

According to Croft from RBS, the effects of permutations in the kingdom are yet to be seen. "It depends on whether the policy of Prince Mohammed succeeds in a year. If by this time he succeeds in placing his supporters on the key posts promoting his plan for large-scale socio-economic changes, he will be able to state that this was a necessary step on the road to modernization, "she said.

Prepared by Caroline