For the 100,000 or so people who jammed into VivaTech, Europe’s biggest tech trade show, in Paris earlier this summer, it was hard to miss the large green exhibition stand near the main stage. “Invest Saudi” was emblazoned on one wall, while a video monitor showed desert landscapes with gleaming robotics labs, solar farms, and skyscraper cities. “It’s a whole new world,” gushed Emon Shakoor, CEO and founder of Blossom Accelerator, a startup in Riyadh that seeds female founders.
Indeed, nearly five years have passed since the brutal killing of Saudi journalist Jamal Khashoggi shocked the world, leaving many U.S. and European partners concerned about risking their reputations by doing deals in a country whose leader, the CIA later concluded, was likely complicit in the murder.
“The situation was unfortunate, to be honest,” said Abdulaziz Alhouti, 33, chief investment officer of Jahez Group, a $1.7 billion food-delivery company in Riyadh that launched two years before Khashoggi’s death in 2018. But, he told Fortune, standing amid the crowds at VivaTech, those dark days have passed. “It’s something that is behind,” said the former investment banker. “And now we need to, as a culture, as a people, move away from it.”
Saudi entrepreneurs are intent on doing just that: moving on and making money. And it appears to be working; investors are back in force. “We’re in a golden age,” said Shakoor, 29, who returned home to Riyadh after four years of studying and surfing at the University of California, San Diego.
Just how golden? One clue is this year’s Fortune Global 500 ranking of the world’s biggest companies, which debuts tomorrow, Aug. 2. (Check back then for the full ranking.) Saudi Aramco is valued at over $2 trillion, and even more notable: its net profits last year topped $159 billion. That makes it the most profitable business in the world.
$2.1 trillion
market capitalization of Saudi Aramco, the third most valuable company, and the most profitable business, in the world. Source: Bloomberg
To many Americans and Europeans, the dizzying wealth of a kingdom of 36 million people seems unrelated to their lives. If they think about Saudi Arabia at all, it may be for reasons the country prefers not to dwell on: Khashoggi’s killing, the jailing and torture of dissidents, the devastating war in Yemen, the vanished princesses whose plight was the subject of a recent New Yorker article, and the connection to the 9/11 attacks, in which 15 of the 19 perpetrators were Saudis.
Meanwhile, Saudi officials and business leaders paint a very different picture, portraying the country as thriving, modern, youthful. It’s a country whose 8.7% growth rate last year was the fastest of any big G20 economy, one that offers some of the most lucrative business opportunities anywhere.
Here’s the problem for Western investors and companies: Both versions are correct. That has sparked a complex set of calculations over which narrative—a repressive monarchy, or a land of opportunity—should prevail, and whether it is even possible to accommodate both.
To human rights defenders, the answer is definitely no. To investors or those seeking Saudi investment, the answer is … fading from conversation, as the kingdom pours its oil profits into industries from golf to technology in increasingly brazen ways.
In early June the country’s $700 billion Public Investment Fund (PIF) made a stunning move on U.S. golf. Chaired by de facto Saudi leader and prime minister Crown Prince Mohammed bin Salman, known widely as MBS, the PIF steamrolled over the opposition of professional golfers and inked an agreement that would turn its two-year-old LIV Golf organization and the PGA Tour—hitherto bitter rivals—into collaborators bankrolled largely by PIF money. PGA officials say that the deal will create a “PGA Tour–controlled subsidiary.” But Yasir al-Rumayyan—who also serves as chairman of Saudi Aramco—will chair the new global golf body if the deal goes through.
Alarmed U.S. lawmakers have tried to pump the brakes, and called a Senate hearing in July to consider risks to U.S. national security and antitrust protections.
“There is something that stinks about the path you’re on, because it is all about the money,” Sen. Richard Blumenthal, a Democrat from Connecticut, told PGA officials. “The Saudi government has the controlling interest.”
But executives argue that they have little choice: Shun the Saudis, and they might anyhow buy out the assets from under them. “If they take just five players a year, then in five years, they can gut us,” Jimmy Dunne, vice chairman of Piper Sandler, who negotiated the PGA Tour deal, told the Senate. “If we do nothing, they could end up owning golf.”
Aramco’s vast oil profits have driven other PIF sports investments, including the nine-figure contracts the Saudi pro soccer league signed this summer with some star European players, and negotiations with international tennis organizations to host major tournaments in the kingdom. But while the sports deals have captured headlines, the real weight of Saudi Arabia’s growing global influence extends far beyond golf greens, soccer fields, and tennis courts.
With a hosepipe of cash from one of the world’s most crucial resources—hydrocarbons—the country has plowed tens of billions into foreign assets, some during the depths of the COVID-19 pandemic while Wall Street was reeling. “You don’t want to waste a crisis,” al-Rumayyan quipped at the time.
The Saudis certainly did not. Their U.S. investments alone include more than 60% ownership of Lucid Motors, a California EV maker; stakes in rideshare company Uber (MBS was an early investor); and gaming companies Activision Blizzard and Electronic Arts.
And that’s just the beginning: At the Paris conference, Badr al-Badr, a Saudi deputy minister of investment, estimated that the country has about $3.2 trillion to invest by 2030. MBS has mandated that investment entities create diversified portfolios, as part of his Vision 2030 strategy to lessen the country’s economic dependence on oil.
The interest flows both ways, as Western businesses seek opportunities to cash in on the kingdom’s booming economy and its big-spending citizens. “There are so many opportunities for investors,” al-Badr told Fortune.
The potential for giant deals that are quickly executed has proved irresistible for companies big and small. For world leaders and business executives, that has provoked a fierce debate over whether it’s worth criticizing Saudi Arabia and risk forgoing such rich rewards. The question has grown more pronounced with the Ukraine war and rising inflation, since oil prices have a profound impact on the price of food, electricity, and much else—and as it has become evident that economic power will not likely usher in democracy. (It has not, after all, in China, Saudi Arabia’s prized customer.)
Already, righteous expressions of outrage are melting in the face of a tidal wave of cash.
The latest example is the July appointment of Amin Nasser, CEO of Aramco, to the board of BlackRock. The investment company and its outspoken CEO, Larry Fink, are known for their commitment to ESG principles, and Fink pointedly pulled out of a conference in Riyadh in 2018 following Khashoggi’s killing. But in announcing Nasser’s appointment, Fink touted Nasser’s “leadership experience, understanding of the global energy industry and the drivers of the shift towards a low-carbon economy, as well as his knowledge of the Middle East region.”
And Fink is just the latest business leader to openly embrace an alliance with the kingdom. Last March, two days after MBS announced the creation of Riyadh Air, wholly owned by the PIF, the Saudis placed a $37 billion order with Boeing for 78 Dreamliner aircraft. “We could not be happier with the order, the size, the scale,” Boeing CEO Dave Calhoun told CNBC. He called the region “critically important” to the company.
A similar shift seems to have occurred among world leaders. Take Washington: Back in 2019, presidential candidate Joe Biden vowed to make the Saudis “the pariah that they are,” and ensure that they “pay the price” for the murder of Khashoggi, who lived in the U.S. and wrote for the Washington Post. But as president, Biden landed in Riyadh in 2022 and warmly fist-bumped the young crown prince. He had come to ask a favor of MBS: to sell more oil on world markets, in order to lower inflation and avert a global recession.
Instead, months later, the 13-country OPEC group of oil producers—of which Saudi Arabia is the dominant player—cut global oil sales by 2 million barrels a day. The Saudi government insisted the decision was not political. But with one move, MBS, who turns 38 in August, had demonstrated his power over 80-year-old Biden and other Western leaders—all of whom he will likely outlast by decades.
That power can be traced to one company: Saudi Aramco.
With more than 267 billion barrels of oil reserves, and some 8.5 trillion cubic meters of natural gas, the country sells about 10 million barrels of oil a day—about 10% of world consumption. But it pumps much more, and incredibly cheaply: It costs the company little more than $8 to produce one barrel of oil, compared with average costs of about $53 a barrel in the U.S. Storing all that excess oil allows the country to increase or decrease exports, and affect world oil prices.
“The Saudis can turn production on and off by fiat,” says David Rundell, a former U.S. diplomat to Saudi Arabia and author of a book on MBS. “They are the only people who retain a big surplus of oil,” he says. “That gives the Saudis a huge amount of political influence in the world.”
“The Saudis can turn [oil] production on and off by fiat.”
David Rundell, former U.S. diplomat to Saudi Arabia
I saw the source of this influence firsthand when I hopped an Aramco plane deep into the kingdom’s Empty Quarter desert in 2017. Aramco’s Shaybah oilfields seem to stretch into infinity—or at least, all the way to its export terminals.
There is little the world can do to lessen their importance, given its dependence on fossil fuels. Despite sweeping U.S. and European Union targets to transition to green energy, the world still consumes about 100 million barrels of oil a day, driving cars, flying on planes, and buying items that arrive on container ships.
“Oil is still fuel for nearly 95% of transportation,” says Jim Krane, Middle East energy analyst at Rice University’s Baker Institute in Houston. “You cannot get anywhere without the Saudis.”
The Saudis intend to build on that advantage by investing heavily in creating a homegrown green economy—efforts that climate groups have dismissed as “greenwashing,” or meaningless image-building. MBS has declared the desert nation—which is feeling the effects of climate change in the form of droughts, extreme weather, and rising sea levels—will zero out its heavy carbon footprint by 2060. Dozens of solar and wind projects are under construction, in an effort to upgrade the country’s grid, about 40% of which runs on fossil fuels.
And yet, in a seeming paradox, the government has instructed Aramco to increase production to well over 13 million barrels of oil a day by 2027. If Western oil companies trim their fossil-fuel output, as they’ve said they intend to, Aramco could become an even more pivotal producer.
The country is also plowing billions into green-tech research and development, seeking new uses for its oil and gas, such as producing green and blue hydrogen—both potentially lucrative future exports. “If you’re worried about people weaning themselves off oil, you want to use oil in new ways,” Krane says.
These green-tech projects are richly funded—again through the PIF, backed by Aramco’s huge profits. It’s essentially a blank check, says Mudhyan al-Mudhyan of the National Energy Services Co., which is helping to upgrade the grid for thousands of office buildings and apartment blocks in Riyadh. “We don’t need to go to banks or any lending institutions,” al-Mudhyan told me during a visit in 2021 to the government’s energy research center in Riyadh, known as Kapsarc.
That strategy will need global partners and customers—especially in the West. And many U.S. and European companies appear eager to dive in.
That much seemed clear in Paris. Three days after VivaTech, al-Badr’s ministry hosted a standing-room-only investment conference in the city, where French businesses signed agreements with Saudi startups.
And later that same evening, a convoy of luxury sedans escorted MBS to a swank dinner in central Paris, where the kingdom pitched its bid to host the 2030 World Expo—a six-month extravaganza at which more than 100 countries would mount exhibitions and hold events, potentially drawing millions of visitors.
Despite a competing bid by Rome, French President Emmanuel Macron backed the Saudis, infuriating his fellow European leaders. In Paris, Macron treated the crown prince to a private lunch in the sumptuous Elysée Palace, while his office later said that the president had expressed “the desire of French companies to continue supporting the ambitious Vision 2030.”
Sitting atop vast reserves of fossil fuels, with hundreds of billions in revenue, Saudi Arabia certainly has big ambitions. And judging by its current bonanza, plenty of investors seem happy to support them.
This article appears in the August/September 2023 issue of Fortune with the headline, “A tidal wave of Saudi money.”
