Crown prince of Saudi Arabia Mohammed bin Salman recently began a campaign to bring about major economic and political change within his country, a move that will directly affect the markets and politic of surrounding nations and evidently of the world.
Prince bin Salman, who is also the acting defense minister, is considering listing shares of Saudi Aramco on the Saudi Arabian stock exchange. Should he decide to float the company, it would become the world’s most valuable publicly-traded company with an estimated market valuation in the trillions.
Saudi Aramco is an oil and gas company based in Dhahran, Saudi Arabia. As one of the largest oil producers in the world, Aramco controls both of the largest onshore and offshore oil fields in the world. Interestingly, the company is owned by the Kingdom of Saudi Arabia.
The decision to sell Aramco stock publicly comes at a time of economic turmoil in Saudi markets. As a country whose economy is largely dependent on its oil reserves, Saudi Arabia was hit hard by a recent seventy percent collapse in oil prices that resulted in a $98 billion deficit.
Along with the public offering of Aramco stock, the prince plans to introduce a VAT (value-added tax) on oil, to implement further privatization in the health and education sectors, and, in response to the recent collapse in oil prices, to diversify the economy in an effort to diminish Saudi Arabia’s dependence on world oil prices.
While these changes are revolutionary on their own, they mark a new era in Saudi Arabia, and the end of a period when the country was known purely for its oil reserves. Many anticipate future conflict within the country, however, as some have speculated that foreign influence in the country spurred on by these measures may clash with the traditionally conservative values of the country. In any case, the measures of Prince bin Salman mark the beginning of a new chapter for Saudi Arabia.