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The world according to Trump: Russia vs Saudi Arabia

Overview

OVERVIEW

Whatever foreign policy decisions may lie in store from Donald Trump, important global counterparties are already positioning themselves for potential outcomes – with Russia and Saudi Arabia offering an instructive contrast that has a bearing on the global oil market and geopolitical tail risks in addition to those countries’ domestic assets.

Key judgments

  • With Trump’s campaign rhetoric presenting potential threats for Saudi Arabia and gains for Russia, the two countries will adopt contrasting stances in their areas of vital interest: active Saudi counter-measures in the Middle East compared to a cautious long Russian game in western Eurasia.
  • In this environment, the Saudis will push all the harder for OPEC action to support the oil price, despite the free-riding of Russia and Iran – making Russia the main net beneficiary.
  • Geopolitical logic points to a fresh chapter of danger surrounding Israel.
  • Regardless of whether the future Trump administration offers Russia the prize of a new European security architecture, a more moderate re-rating of Russian asset valuations – especially equities – is highly probable as a result of the success of François Fillon in the French presidential primaries.
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