After Driving Down Oil, Saudi Arabia’s MBS Looks for Trump Dividend

The re-election of Donald Trump in 2024 has reshaped global energy politics, with Saudi Arabia’s Crown Prince Mohammed bin Salman (MBS) positioning himself to capitalize on the political alignment between Riyadh and Washington. As OPEC+ production decisions sent oil prices plunging to multi-year lows, MBS is now leveraging Trump’s mandate to secure economic and strategic benefits—despite the short-term pain to Saudi finances.

The Oil Market Gamble

In early 2025, OPEC+ accelerated production increases, adding 411,000 barrels per day (b/d) to global supply—a move that drove Brent crude to a four-year low of $58.50 per barrel by May. The decision, though framed as market discipline, was also a strategic play to undercut U.S. shale producers and weaken European energy prices. Saudi Arabia, despite needing an oil price of $96.20/bbl to balance its budget, accepted lower prices to sustain its influence.

The gamble hinges on two assumptions:
1. U.S. Economic Resilience: Trump’s administration argues that lower oil prices will boost American consumer spending and manufacturing competitiveness.
2. Long-Term Investment Gains: The $1 trillion in Gulf investments pledged to the U.S. (led by Saudi Arabia) could offset short-term fiscal strains.

The Trump Dividend: Opportunities and Risks

The $1 trillion investment pledge—a mix of military sales, tech partnerships, and infrastructure projects—aims to deepen U.S.-Saudi economic ties. Key elements include:
- $100 billion in U.S. military purchases (missiles, radar systems), reversing Biden-era restrictions.
- $100 billion for AI/data centers from UAE’s MGX fund, paired with Saudi-backed mining ventures for critical minerals.
- CFIUS reforms to fast-track Gulf investments, despite skepticism from economists like Karen Young, who notes the figures are “long-term aspirations, not immediate deliverables.”

The Fiscal Tightrope

Saudi Arabia’s strategy is fraught with contradictions. While lower oil prices undermine its budget (projected $27 billion deficit in 2025), they also weaken geopolitical rivals like Russia and Iran. Yet, the kingdom’s Vision 2030—aimed at diversifying its economy—faces headwinds:
- Declining Foreign Direct Investment (FDI): Three consecutive years of FDI declines (2022–2024) threaten projects like The Line megacity.
- Debt Dependency: Riyadh’s reliance on borrowing to fund non-oil spending risks credit downgrades.

The Political Play

MBS’s alignment with Trump is transactional but strategic. The U.S. president’s re-election offers:
1. Diplomatic Cover: Trump’s focus on “America First” justifies Saudi arms deals and investment pledges, sidelining concerns over human rights or the Khashoggi murder.
2. Geopolitical Leverage: A U.S.-Saudi partnership strengthens containment of Iran and bolsters Saudi influence in the Gulf.

However, risks loom large:
- Oil Market Volatility: Goldman Sachs forecasts Brent at $66/bbl by year-end, still below Saudi’s breakeven.
- Investment Realities: The $1 trillion pledge requires tapping nearly 108% of the Saudi Public Investment Fund’s assets—raising questions about sustainability.

Conclusion: A High-Stakes Balance

MBS’s strategy hinges on converting short-term oil price declines into long-term political and economic gains. The Trump dividend—if realized—could secure U.S. military backing, tech access, and economic partnerships. Yet, the kingdom’s precarious fiscal position and the U.S. administration’s transactional approach leave little room for error.

The numbers tell the tale:
- $58.50/bbl Brent price (May 2025) vs. Saudi’s $96.20/bbl fiscal breakeven.
- $1 trillion pledge vs. Saudi’s $925 billion PIF assets.
- 7% Saudi unemployment vs. Vision 2030’s 5% target.

For investors, the calculus is clear: While the Saudi-U.S. partnership offers opportunities in energy, defense, and infrastructure, the risks—including oil market instability, geopolitical flare-ups, and fiscal overreach—are equally profound. MBS’s bet on Trump may yet pay off, but the stakes could not be higher.