Not only is Saudi Arabia the world's largest oil producer, it also has the world's largest oil-fired power plant, the Shuaiba Power Plant, which consumes around 200,000 barrels per day at its peak, enough to meet the daily consumption of a small European country like Portugal.

Based on this information, Bloomberg published a report on the price of oil, discussing that Saudi Arabia has the power to increase the price of oil and its consumption, not just increase its production.

Global oil demand forecast peak

If global oil demand peaks in the next five years, as the International Energy Agency predicts, it will take more than just widespread adoption of electric vehicles, says Javier Bias, a Bloomberg reporter who tracks commodities and energy. Saudi Arabia must shift to a lower-energy policy to balance the books or oil prices will soar, he says.

Saudi Arabia consumes about 3.7 million barrels per day, making it the world’s fourth-largest oil consumer after the United States, China and India. According to the International Energy Agency, Saudi Arabia is expected to see the second-largest decline in oil consumption by the end of the decade, down more than 500,000 barrels per day.

Saudi Arabia's plan...transition to renewable energy

Saudi Arabia plans to transition to gas-fired power plants and renewable energy, with the goal of reducing or eliminating the use of oil in electricity generation by 2030. A key part of this plan is the development of the Jafurah natural gas field, a shale-like gas reserve on Saudi Arabia’s east coast.

Challenges facing Saudi Arabia

Bias highlighted four major challenges facing Saudi Arabia to maintain its position as the world’s largest oil producer if demand reaches a real peak in the coming years, as follows:

1. Jafurah Field Development: Developing this field is a massive project, and it is unclear whether Saudi Aramco (TADAWUL:2222) can achieve the ambitious timeline.

2. Re-equipping stations: Saudi Arabia needs to upgrade some power stations and build new stations to retire old stations.

3. Building renewable energy stations: Saudi Arabia needs to build many solar and wind power stations.

4. Huge investments: Saudi Arabia needs to invest billions of dollars in more energy-efficient desalination plants.

If global oil demand is to peak soon, Saudi Arabia’s state-owned electricity and water companies will be crucial, along with electric car companies like Tesla (NASDAQ:TSLA), to achieving true market balance and maintaining the balance of global production and consumption.

Oil prices now

Brent oil is currently trading at $84.9 per barrel, up 0.5% in the last 24 hours, while crude oil is trading at $81.3, up 0.49% in today's trading.

Saudi Arabia aims to reach $100 oil prices to balance the markets, which Western countries consider a catalyst for inflation. OPEC Plus, led by Saudi Arabia and Russia, extended oil cuts until the end of 2025, with some countries announcing that they will stop cuts at the end of 2025.