Sheikh Yamani and his Oil Prophesies

 

Sheikh Ahmed Zaki Yamani, the former Saudi oil minister who passed away on February 23 in 2021, has left an impressive legacy that no substitute can ever match in terms of vision, intellect, influence, power and the courage for calling a spade a spade when, the need was in the air.

Mr Yamani achieved all that without being born into Royalty in his native Saudi Arabia; he was a commoner with Bedouin roots and born in Mecca in 1930.

He was educated in Egypt and then at Harvard before being attracted to the Saudi ruling circles, thanks to his skills in identifying the undercurrents in the realm of oil and turning them to the full benefit of the country he represented.

The OPEC would not have been where it is now, without him. In Mr Yamani’s heyday, if the OPEC was the solar system, he was the central Sun that kept what belongs to the former in orbit; it’s no exaggeration that his mere presence in the OPEC meetings has, more often than not, made the collective outcomes, foregone conclusions.

Mr Yamani saw the assassination of Saudi King, Faisal, on March 25 in 1975, standing a few inches from the king; the former could have been subjected to the same, if the assassin, a young Saudi prince, really wanted, when the dying king fell into Mr Yamani’s arms.

Moreover, Mr Yamani, along with other OPEC oil ministers, survived a hostage ordeal in Vienna on 21 December 1975 at the hands of Carlos the Jackal.

In 1973, Mr Yamani was instrumental in triggering off a global energy crisis by halting crude oil exports to the US in particular and the West in general for their backing for Israel against the Arabs; the crude oil price quadrupled overnight and economic activities took a catastrophic hammering.

A few years later, however, not only did he repair the relations, but also elevated Saudi Arabia to a more formidable, global player while keeping his influence beyond Saudi Arabia intact.

Mr Yamani did not always obey his masters in Riyadh, though; for instance, when King Fahd asked him to increase the Saudi production at an OPEC meeting in 1986, Mr Yamani refused to heed the order and was summarily sacked by the king.

After his dismissal, he founded an equity firm and spent his time and energy on the things he had a strong passion for, while living mainly in London, United Kingdom, until his death at the age of 90.

In 2000, Mr Yamani kicked up an anxiety equivalent of a desert storm with a journalist of the Daily Telegraph.

In it Mr Yamani said, “The Stone Age came to an end, not because we had a lack of stones, and the oil age will come to an end not because we have a lack of oil."

Since he was the ex-oil minister for Saudi Arabia, it grabbed the headlines across the world, as he knew about oil much better than anyone in the field did,  with his over 40-year association with the commodity.

In the same interview he said that there would be a price crash in 2005; it came almost 10 years later, though. In addition, he said the discovery of new oil fields and the fuel-cell technology in automobiles will make the supply side stronger than that of demand at some point; as a result, Mr Yamani said that oil will remain where they are underground with no buyers in 30 years, i.e. by 2030.

At that time it sounded like harbinger of doom for the oil sector. By strange coincidence, OPEC said last year that the demand would plateau in the late 2030s; interestingly, the United Kingdom wants all cars to go electric by 2030. In short, Mr Yamani’s choice of year is significant and does not ring entirely hollow.

Although Mr Yamani got some of his predictions right, there are no signs to believe that we will be able to completely turn our back on crude oil by 2030, even if it was from a veteran – and a visionary.

Although there are a few alternatives for the fossil fuels at present, their combined potential is not enough to be a credible substitute yet; if the automobile pioneers, including those who changed the landscape of the EV, say in unison that there will be not enough electricity to power the vehicles, there must be reason for it that cannot be ignored.

Mr Yamani, however, deserves the credit for seeing something in the offing, when the renewable debate was not as emotive as it is now; what he said on the floors of the OPEC, meanwhile, will reverberate for years to come, when cartel stumble upon mushrooming challenges in the years ahead.