Saudi Arabia took steps to reverse some cutbacks on worker benefits and ministers' salaries — a move that could make the kingdom even more reliant on getting a higher price for oil, analysts said.
The move comes as oil flounders around $50 per barrel, and supplies have stubbornly held at high levels. It also suggests the kingdom may be even more eager to sign on to a new OPEC production deal to stabilize oil prices, analysts say.
Saudi Arabia over the weekend also announced some shifts in high-level positions. King Salman promoted two of his sons. Prince Khaled bin Salman was named
"It makes them want to have a [production] deal, and it certainly helps King Salman and the leadership ensure
Saudi Arabia said it made the decision to end the pay cuts and bring back bonuses because the government's financial position improved. But some analysts said it may have instead been to placate an unhappy public after measures that rolled back financial benefits and removed energy and
"They adjusted things; they claim they are adjusting things because the economy is in a better position, but that's nonsense," said Simon Henderson, Baker fellow at The Washington Institute and director of the Institute's Gulf and Energy Policy Program. "It sounds as though they felt it politically necessary to do something, which is economically risky. … They certainly need to adjust their budget."
Henderson said the moves also are another sign of Deputy Crown Prince Mohammed bin Salman's rising influence. Bin Salman, 31, is behind Saudi's Vision 2030 plan to diversify the kingdom away from oil, in part through the sale of a public stake in Saudi Aramco. Known as MBS, he is also second in line, after his cousin, Crown Prince Muhammed bin Nayef. But he is the king's favorite son and he has been upstaging bin Nayef, known as MBN.
"The essence of the main headline changes is it's MBS strengthening his power base and if not directly undermining certainly sidelining MBN," said Henderson. The new U.S. ambassador is bin Salman's younger brother. The new minister for energy affairs is his older half-brother.