LONDON: Saudi Arabia’s future sovereign credit rating will be judged on the success of its reform program rather than its oil revenues, rating agency Moody’s has told Arab News.
The global credit rating agency’s Managing Director of Global Sovereign Ratings, Alastair Wilson, said he attached importance to institutional determination to implement change and would also look at efforts made to diversify the economy to make it less reliant on fossil fuels.
He said “a simple reversion to oil price strength” would not result in an automatic strengthening of Saudi Arabia’s or any other GCC state’s sovereign ratings, “hence this was a wake-up call and the authorities recognized this.”
“In other words, structural weakness … based on hydrocarbon dependence needs to be corrected. That’s not going to go away.”
The successful implementation of the Kingdom’s plans over the next 10-12 years would be “challenging” but by no means impossible, he said.
Wilson said he was expecting “some success” over time, but no one anticipated “transformation overnight.”
Moody’s would take into account a number of factors before assigning a revised rating for KSA, he said. These would include the success of efforts to diversify revenue streams in order to insulate the government from “further oil price shocks.”
There were four cornerstones to credit ratings, he said — “accounts’ strength, institutional strength, fiscal strength and the ability to withstand exposure to shocks.”
“Institutional strength is linked to effective implementation of policies, the way policy reforms are articulated, and the attainment of stated objectives. All this, we will feed through our analysis … to help us to assess institutional fortitude.”
He explained that Moody’s wasn’t necessarily looking at metrics based on quantity, so there would be an element of judgment linked to quality (of institutional oversight) in the short to medium term.
“Over time we will see the benefits of reforms that the governments expect to see. Perhaps we will get higher growth because we will get higher growth in the non-oil economy.”
Wilson said an important indicator of a more resilient fiscal position was the non-oil balance sheet. “The non-oil fiscal deficit in most of these (GCC) countries is very high. We expect to see this coming down. We would expect to see lower volatility in economic growth over a period of time, say during a five, 10 or 15-year period.”
Over the next few years Moody’s would deliver “essentially a qualitative judgment” on reform efficacy, said Wilson. Although the oil price would be largely ignored, he agreed that a high price could buy time for GCC governments.
But he warned: “The supply and demand drivers in the market are not a great deal different from where they were a year or so ago… Yes, oil could go to $100 per barrel, but we don’t think that’s sustainable …. we think GCC countries have learnt from the oil price shock that what has been happening is structural in nature. The oil price can alleviate pressure, but is not central to our analysis,” he said.
David Staples, managing director and head of emerging EMEA corporates, said at a London emerging market forum that GCC governments had been clear about what they wanted to achieve, so “in a way we are measuring them against their own (stated) goals.”
Rehan Akbar, vice president of Middle East and Turkey corporates for Moody’s, said at the forum that there had been an acceleration of debt issuance in the past couple of years. Growth opportunities for businesses in the GCC were less than average, he said. Scope for businesses to grow organically were slightly subdued as new taxes and the withdrawal of subsidies had constrained consumption.
“We will probably see more cost control, and more M&A both in the region and outside,” said Akbar.
Earlier this month, Moody’s said in its annual credit analysis report on Saudi Arabia that the Kingdom’s (A1 stable) credit strengths included a strong fiscal position, substantial external liquidity buffers, a large stock of proved oil reserves combined with low extraction costs, and prudent financial system regulation.
“The stable outlook reflects our view that risks to Saudi Arabia’s credit profile are broadly balanced. The government’s reform program, including the plans to balance the fiscal budget by 2023, could over time offer a route back to a higher rating level,” said Moody’s.
Saudi rating to be judged on ‘reform progress’ not oil price warns Moody’s
Saudi rating to be judged on ‘reform progress’ not oil price warns Moody’s
- “A simple reversion to oil price strength” will not result in an automatic strengthening of Saudi Arabia’s or any other GCC state’s sovereign ratings
- Development of non-oil economies increasingly important when assessing sovereign credit quality, agencies caution
‘The age of electricity’: WEF panel says geopolitics is redefining global energy security
- Surging demand, critical minerals, US-China rivalry reshaping energy security as nations compete for influence, infrastructure, control over world’s energy future
LONDON: Electricity is rapidly replacing oil as the world’s most strategic energy commodity, and nations are racing to secure reliable supply and influence in a changing energy landscape.
Global electricity demand is growing nearly three times faster than overall energy consumption, driven by artificial intelligence, electric vehicles, and rising use of air-conditioning in a warming world.
“We are entering the age of electricity,” said Fatih Birol, the executive director of the International Energy Agency, during a panel discussion titled “Who is Winning on Energy Security?” at the World Economic Forum in Davos on Tuesday.
Unlike oil, electricity cannot be stockpiled at scale, forcing governments and companies to prioritize generation, transmission, and storage, making regions with stable infrastructure increasingly important on the global stage.
US-China rivalry
Energy security is increasingly about control and influence, not just supply. The rivalry between the US and China now extends beyond oil to critical minerals, energy infrastructure, and long-term energy partnerships.
“The contrast between the US approach and China’s is stark,” said Meghan O’Sullivan, director of Harvard University’s Belfer Center. “The US, until recently, focused on access, not control. China flips that, seeking long-term influence and making producers more dependent on them.”
O’Sullivan highlighted China’s Belt and Road Initiative, which invests in energy infrastructure and critical minerals across Africa, Latin America, and Asia to secure influence over production and supply chains.
“It’s not just the desire to control oil production itself, but to control who develops resources,” she said, citing Venezuela as an example. The South American nation holds some of the world’s largest crude oil reserves, giving it outsized geopolitical importance. Recent US moves to expand influence over Venezuelan oil flows illustrate the broader trend that great powers are competing to shape who benefits from energy resources, not just the resources themselves.
“There’s no question that the intensified geopolitical competition between great powers is playing out in more competition for energy resources, particularly as the energy system becomes more complex,” O’Sullivan added.
Global drivers of the electricity era
The rise of electricity as a strategic commodity is also transforming global supply chains. Copper, lithium, and other minerals have become essential to modern energy systems.
“A new ‘energy commodity’ is copper,” said Mike Henry, CEO of BHP. “Electricity demand is growing three times faster than primary energy, and copper is essential for wires, data centers, and renewable energy. We expect a near doubling, about a 70 percent increase in copper demand over 25 years.”
Yet deposits are harder to access, refining is concentrated in a few countries, and supply chains are politically exposed.
“The world’s ability to generate electricity reliably will increasingly depend on materials and infrastructure outside traditional oil and gas markets,” Birol said.
AI and digital technologies amplify the challenge with large-scale data centers consuming enormous amounts of electricity.
The Middle East’s strategic relevance
While the global focus is on electricity demand and great-power rivalry, the Middle East illustrates how traditional energy hubs are adapting.
Majid Jafar, the CEO of Crescent Petroleum, highlighted the region’s enduring advantages: abundant reserves, low-carbon potential, and strategic geography.
“Geopolitical instability reinforces, if anything, the Middle East’s role as a supplier with scale, affordability, availability, and some of the lowest carbon reserves,” he said.
Jafar emphasized the region’s ability to navigate the growing US-China rivalry.
“Amid US-China global friction, the Middle East has managed to remain on good terms with both sides,” he said, noting that flexible policy and engagement help preserve influence while balancing competing interests.
The region is also adapting to the electricity-driven era. AI data centers and digital technologies are multiplying power needs. Jafar said: “One minute of video consumes roughly an hour’s electricity for an average Western household. Multiply that across millions of servers and billions of people and the scale is staggering.”
Infrastructure investments further strengthen the Middle East’s strategic position. In the Kurdistan Region of Iraq, the Runaki Project has expanded natural gas–fueled power plants to provide 24/7 electricity to millions of residents and businesses, reducing reliance on diesel generators and supporting economic growth.
According to Jafar, the combination of energy resources, capital, leadership, and agile policymaking gives the Middle East a competitive edge in meeting global electricity demand and navigating the complex geopolitics of energy.
While the panel highlighted the Middle East as one example, in the age of electricity, energy security is defined as much by influence and infrastructure as by barrels of oil, with the US-China rivalry determining who gains and who is left behind.
