OUR Saudi Arabia he did it again. De facto leader of the main production club oil the world raised oil prices earlier in the week after a proposal to further cut production. Given its power OPECthe show of force seems more logical than unexpected.

Saudi prince and crown prince’s last game Mohammed bin Salman this is certainly impressive. When OPEC and its allies such as Russia pledged in October to cut their daily output by 2 million barrels per day, it was an official decision of the so-called OPEC+ Group, which controls more than 40% of world production. Sunday’s equivalent was the “voluntary” announcement of a select subset. More broadly, leading forecasters such as the International Energy Agency expect the oil market to become less elastic later this year as demand in China recovers.

Either way, this could support oil prices. Meanwhile, Saudi Arabia’s long-term reliance on the United States as its main guarantor of regional security usually means it won’t take hasty steps that could drive up gas prices at US gas stations.

However, Mohammed bin Salman has many financial reasons to displease US President Joe Biden. Bank collapses on both sides of the Atlantic sent oil prices down 15% to $73 a barrel in March. This is uncomfortably close to the levels at which Saudi Arabia’s budget is balanced. The most important takeaway is that while the post-coronavirus demand recovery in China should boost oil prices, it’s not entirely clear by how much.

Unlike Europe and the US, China’s oil consumption is more dependent on industry than travel, and the former has not grown enough yet. Saudi Arabia could refuse new cuts if it was afraid of losing market share or causing political unrest.

However, the decline in Russian oil flows to the West and the relative lack of investment in new US shale deposits have increased OPEC’s pricing policy. The Saudi prince is happy that he can cut production without a significant impact on market share.

If demand in China picks up and fears of a general banking crisis ease, then oil prices could rise – Rystad Energy believes they could top $100 a barrel by summer. This could lead to lower inflation and hence interest rates in the West, where central bankers assume oil prices will remain at their current $85 per barrel.

But Mohammed bin Salman showed already last summer that he has the ability to bother Biden over oil, and he is increasingly turning to China. Now he can afford a show of force.