Saudi Arabia made decisions in order to reverse some cutbacks on worker benefits and minister’s salaries, which is a move that could cause the kingdom to become even more reliant on getting a higher sell price for oil.
The move comes as oil floats around $50 per barrel and supplies have been stubbornly pinned at high levels. It also suggests that the kingdom may be even more persistent to sign on to a new OPEC production deal in order to help stop the global oversupply that will stabilize oil prices.
Saudi Arabia over the weekend also stated that some shifts in greater positions. King Salman promoted two of his sons. Prince Khaled bin Salman was named ambassador to the U.S., and Prince Abdulaziz bin Salman was named state minister for energy affairs.
Michael Cohen, head of the energy commodities research at the Barclay’s, stated that "It makes them want to have a [production] deal, and it certainly helps King Salman and the leadership ensure stability of policymaking going forward”. OPEC technical committee recommended to extend the meeting in May, and Saudi Arabia last week shows that there will be a preliminary support for a deal.
The Kingdom said that it made the decisions to end the pay cuts and bring back bonuses because the government’s financial position improved. But there are some analysts that rolled back financial benefits and removed energy and utilities subsidies.
"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.