Just a few years back, the business relationship between the U.S. and Saudi Arabia was pretty simple: The Americans bought oil, and the Saudis spent much of what they earned on equipment to keep the crude flowing and on planes, tanks, and missiles to protect their borders.
With crude prices down by half over the past three years, U.S. domestic oil production up dramatically, and the kingdom embarking on unprecedented economic reforms — including the sale of a stake in its state-owned oil company — the leverage is shifting toward the Americans as the U.S. emerges as a rival energy exporter. The changing relationship will come into sharp focus this weekend, as American corporate titans visit Riyadh for an investment summit scheduled to coincide with Donald Trump’s first foreign trip as U.S. president.
“At this point, the Saudis need the U.S. more than the reverse,” said Philippe Dauba-Pantanacce, global geopolitical strategist at Standard Chartered Plc in the U.K. “They need foreign direct investment to transform the economy, and the U.S. doesn’t need oil anymore.”
For Trump, the visit could provide a welcome respite from the turmoil he has unleashed in Washington over his firing of FBI Director James Comey and the investigation into Russian meddling in the presidential campaign. Saudi King Salman bin Abdulaziz wants backing for a plan to reduce the role of the state and wean the economy off of oil — without stoking popular discontent.
The American executives will want deals. Some, like Jamie Dimon, chief executive officer of JPMorgan Chase & Co., and Morgan Stanley boss James Gorman, already have agreements to advise oil giant Saudi Aramco on its initial public offering, which may be the largest ever. JPMorgan and Citigroup Inc. helped arrange a $17.5 billion Saudi bond sale last year and a $9 billion Islamic bond issue in April. This weekend the banks will aim for more contracts as the Saudis prepare to sell other state assets.
Boeing Co. CEO Dennis Muilenburg and Lockheed Martin Corp. head Marillyn Hewson will be looking to cement defense sales. Aramco could sign at least 10 deals with companies including General Electric Co. and oil field-service businesses Schlumberger Ltd. and Halliburton Co. to open manufacturing plants in the kingdom, people familiar with the plans say.
The U.S. executives are expected to meet the Saudi ministers of finance, energy, and commerce and the head of the kingdom’s sovereign wealth fund, according to a draft agenda for the conference, which was hastily arranged after the Trump visit was announced just two weeks ago. They’ll discuss privatizations, investment opportunities, and the role of the Saudi sovereign fund, then they’ll travel to the Royal Court to sign agreements totaling billions of dollars as Trump and King Salman look on.
“Though ties have historically been strong, nothing of this scale and depth has ever happened before,” said John…