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Saudi Aramco's value surged to $2 trillion two days after it went public on December 10, making it the world's most valuable company.

The record valuation, which defied sceptics' predictions that the stock price would wallow, cheered Crown Prince Mohammed bin Salman (MbS), who had championed the public offering.

The crown prince's decision to extend the OPEC+ arrangement with Russia has led to higher global oil prices, shoring up Saudi Arabia's finances and international geopolitical stature. 

MbS has had mixed success as Saudi Arabia's leader, so the stock surge was a badly needed victory.

He has been condemned for Saudi Arabia's disastrous intervention in the Yemen civil war and what Western intelligence agencies say was his order that Saudi intelligence agents murder Washington Post columnist Jamal Khashoggi at the Saudi consulate in Turkey.

Although MbS has unbridled power at the moment, history has shown that even the most ruthless rulers can be ousted if they go too far.

So what is the crown prince's current scorecard? And what does his continuing rule portend?    

Foreign policy

MbS's foreign-policy initiatives have included Saudi Arabia taking steps to become the Middle East's de facto leader. The Saudis' effort to flex their muscles in the region played well with the United Arab Emirates, with which it became closer. But it turned off gas-rich Qatar, leading to a 30-month rift between the two.

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The United States, an ally of both countries, was caught in the middle of the stand-off, which included Riyadh drumming up diplomatic and economic boycotts against Doha.

Washington's pressure on the two sides to reach an accommodation has led to the beginning of healing, although the Qataris remain distrustful of their bigger neighbour.   

Meanwhile, bin Salman's decision to intervene in the Yemen war to defeat the Houthi rebels – whom the Saudis consider their enemy – has been a disaster.

Joint Saudi-Emirati military moves against the rebels have failed. And the two allies' efforts to cut off food and medicine to Houthi-controlled north Yemen has led to widespread civilian starvation, outraging much of the world.  

After the Emiratis withdrew from the conflict and drone attacks knocked out Saudi oil production for several weeks, MbS agreed to a brokered peace. Experts still disagree over whether the Houthis, or their allies the Iranians, launched the attacks.

Energy and economic-diversification policy

MbS grabbed power in the three years or so, when the US shale revolution was creating a price-depressing global oil glut.

Since most of Saudi Arabia's revenue is from oil and gas, its economy wobbled.

In response, the crown prince offered his Vision 2030 programme – a road map to making the economy more resilient and diversified.

Read also: The challenges and implications for Saudi Aramco's IPO

The Saudis needed an oil-revenue rebound to finance diversification – and MbS's backing for OPEC+ has helped achieve that. His other project for generating the huge amounts of revenue needed to diversify – selling some of Saudi Aramco to the public – is off to a great start. Whether investors keep the stock price high remains to be seen, of course.  

Because of its ability to raise oil prices, the OPEC +  deal has been extended for a fourth year. But there have been tradeoffs for the Saudis. Saudi Aramco has shouldered almost half the production cuts that reduced global supply and thus prices.

At the last OPEC+ meeting, it agreed to cut an additional 400,000 barrels of oil production a day to keep prices up. In contrast, the deal's other major player, Russia, finagled a whopping quota exemption: 700,000 barrels a day of its gas condensate production will not count toward the quota.

To protect its market share in Europe and Asia, Saudi Aramco is offering discounts on its oil. Even this failed to prevent Russia from grabbing the Saudis' position as the leading supplier to China, the world's biggest importer.

Why OPEC remains the Saudis' trump card

Although the money from the Saudi Aramco public offering is crucial to MbS's Vision 2030, the kingdom's ability to continue being the kingpin in setting oil prices is more important to Saudi Arabia's geopolitical ambitions.

That's why MbS is willing to shoulder OPEC+'s heaviest production cuts and even risk losing market share in some lucrative locales. 

Both former Energy Minister Khalid Al Falih and current Minister Abdulaziz bin Salman believe US shale will reach its peak production and begin declining soon. This would lead to Saudi Arabia, which has the world's largest oil reserves, reclaiming its position as the heavyweight champion of oil-price setting.

Ironically, the country whose oil output the Saudis want to see falter – the United States – is one reason why MbS remains in power after several missteps. The Trump administration has stood behind him on every blunder.

If Donald Trump loses the 2020 election, MbS's days may be over, however. Saudi Arabia may be able to overcome the US shale revolution in a few years. The question is whether the crown prince will retain his grip on power until then.

Rauf Mammadov is resident scholar on energy policy at The Middle East Institute and senior adviser at the Gulf State Analytics. He focuses on issues of energy security, global energy industry trends, as well as energy relations between the Middle East, Central Asia and South Caucasus.

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