On November 4th, Saudi Arabia Crown Prince Mohammed bin Salman launched an anti-corruption crackdown in the Saudi kingdom. Several prominent members of the royal family and the business world have been arrested or placed under house arrest. Among the detainees are Prince Fahd bin Abdullah, the former Minister of Defense, Prince Mutaib bin Abdullah, former Minister of the National Guard and Prince Turki bin Abdullah, the former governor of Riyadh. Also included in the crackdown was former crown prince Prince Mohammed bin Nayef who is rumored to have been under house arrest since he was removed as crown prince in June. Many of the family members arrested were aligned with the previous crown prince, or were known to have disapproved of Mohammed bin Salman’s appointment to crown prince.
Prominent businessmen arrested or detained include the construction magnate Bakr bin Laden and Prince Alwaleed bin Talal, the Kingdom’s wealthiest man and owner of the Kingdom Holding Group, the largest investment holding group in the country. Waleed al-Ibrahim, the chairman of Middle East Broadcasting Center (MBC), one of the largest media groups in the region has also been detained. The nature of the detentions insinuates that this crackdown is more about clearing the way for the crown prince’s eventual ascension to the thrown than it is about fighting corruption. With no formal framework of financial regulation in place for the country’s multitudinous princes, the line between corruption and course-of-business is blurry and open to interpretation.
Shortly before the roundup of dozens of princes and businessmen, Prime Minister Saad al-Hariri of Lebanon unexpectedly resigned in a live broadcast from the Saudi Arabian capital of Riyadh. The surprise move is believed to have occurred under heavy pressure from the Saudi government, which back’s Saad al-Hariri’s Sunni party. The move shows Crown Prince Mohammed’s willingness to aggressively fight for Saudi leadership in the region. Prime Minister al-Hariri’s resignation speech, denouncing Iran and Hezbollah, hints at shifting tensions between Iran and Saudi Arabia. This may indicate that Lebanon may be used by the two rival powers as the ground for a new proxy war, now that Riyadh is coming to terms with its defeat in Syria’s proxy war.
Since Crown Prince Mohammed’s rise to power, the Saudi kingdom has been building up tensions in the Middle-East against Yemen, Qatar, Iraq and mostly Iran. It was under Crown Prince Mohammed’s influence that Saudi Arabia launched heavy military interventions in Yemen and pushed GCC countries to cut diplomatic ties with Qatar. The military support of government forces against Houthi rebels supported by Iran and the severing of diplomatic ties with Qatar which is an important GCC member which has made Iran one of its strategic partners shows that Iran is the country which is directly targeted by MBS’ foreign policy
Henceforth we would expect a rise in regional tensions, including possibly violent fights with Iran in Lebanon, in addition to the ongoing war with Yemen. Crude’s reaction to the shake-up has so far been muted after temporarily spiking. However, prices spiking shows that geopolitical risk is clearly again becoming a factor for crude prices. Ongoing tensions, especially with the chance of erupting into armed conflict or leading to a deterioration of the OPEC supply deal will keep investors nervous and prices supported.