What does it say about the future of oil prices when the largest exporter of oil declares plans to be able to live without it by 2020? On Monday, Saudi Arabia announced Saudi Vision 2030—a long-term road map to get rid of the oil economy tag. That’s ambitious: hydrocarbons are currently responsible for over 90% of its budget revenues. And for now at least, production cuts are unlikely; Riyadh will need its oil revenues to fund diversification.
But there are two implications. The first is that Riyadh’s ability to steer Organization of the Petroleum Exporting Countries towards acting in concert and having a coherent policy is fraying. The recent dithering on a production-cut deal points to this. The other is that Riyadh thinks the global economy may be entering the fabled period of peak oil and wants to be ready. Both are, of course, open to speculation. But there is grist enough for the analyst mill here to add that much more uncertainty to the oil- price guessing game.