- The Saudi stock market dropped as much as 7% after President Donald Trump threatened “severe punishment” over the disappearance of Washington Post columnist Jamal Khashoggi.
- The drop in the Tadawul exchange in Riyadh happened Sunday, the first day of trading.
- Saudi Arabia has responded that it rejects any “threats” of economic sanctions or political pressure.
- Turkish officials say they fear Saudi agents killed Khashoggi after he entered the Saudi Consulate in Istanbul on Oct. 2. The kingdom has called the allegations “baseless.”
DUBAI, United Arab Emirates (AP) — Saudi Arabia warned on Sunday that it will respond to threats and political pressure with tough measures of its own after President Donald Trump said the oil-rich kingdom deserves “severe punishment” if responsible for the disappearance and suspected murder of Washington Post contributor Jamal Khashoggi.
The apparent threat of economic retaliation from the world’s top oil exporter came after a turbulent day on the Saudi stock exchange, which plunged as much as 7% at one point.
Turkish officials have said they fear a Saudi hit team killed and dismembered Khashoggi, who wrote critically of Saudi Crown Prince Mohammed bin Salman. The kingdom has called such allegations “baseless” but has not offered any evidence Khashoggi ever left the consulate.
Already, international business leaders are pulling out of the kingdom’s upcoming investment forum, a high-profile event known as “Davos in the Desert,” and the sell-off on Riyadh’s Tadawul stock exchange showed that investors are uneasy.
The exchange dropped by over 500 points, then clawed back some of the losses, ending the day down 264 points, or more than 4%. Of 188 stocks traded on the exchange, 179 ended the day with a loss.
“Something this big would definitely spook investors, and Saudi just opened up for foreign direct investment, so that was big,” said Issam Kassabieh, a financial analyst at Dubai-based firm Menacorp Finance. “Investors do not feel solid in Saudi yet, so it’s easy for them to take back their funds.”
Trump: ‘We’re going to have to see’ if Saudi Arabia did it
In an interview scheduled to air Sunday, Trump told CBS’ “60 Minutes” that Saudi Arabia would face strong consequences if involved in Khashoggi’s disappearance.
“There’s something really terrible and disgusting about that, if that was the case, so we’re going to have to see,” Trump said. “We’re going to get to the bottom of it, and there will be severe punishment.”
But the president has also said “we would be punishing ourselves” by canceling arms sales to Saudi Arabia.
The sales are a “tremendous order for our companies,” and if the Saudis don’t buy their weaponry from the US, they will get it from others, he said.
Saudi Arabia could use oil production as a weapon
“The kingdom affirms its total rejection of any threats and attempts to undermine it, whether by threatening to impose economic sanctions, using political pressures or repeating false accusations,” the statement said.
The statement did not elaborate. But a column published in English a short time later by the general manager of the Saudi-owned Al-Arabiya satellite news network suggested Saudi Arabia could use its oil production as a weapon. Benchmark Brent crude is trading at around $80 a barrel, and Trump has criticized OPEC and Saudi Arabia over rising prices.
“If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure,” Turki Aldakhil wrote.
But it’s unclear whether Saudi Arabia would be willing to unilaterally cut production.
Aldakhil added that Saudi arms purchases from the US and other trade could be at risk as well.
“The truth is that if Washington imposes sanctions on Riyadh, it will stab its own economy to death, even though it thinks that it is stabbing only Riyadh!” he wrote.
Companies pull out of ‘Davos in the desert’ conference
Prince Mohammed has aggressively pitched the kingdom as a destination for foreign investment. But Khashoggi’s disappearance has led several business leaders and media outlets to back out of the upcoming investment conference in Riyadh called the Future Investment Initiative.
That includes the CEO of Uber, a company in which Saudi Arabia has invested billions of dollars, as well as billionaire Richard Branson.
Khashoggi has written extensively for the Post about Saudi Arabia, criticizing its war in Yemen, its recent diplomatic spat with Canada and its arrest of women’s rights activists after the lifting of a ban on women driving. Those policies are all seen as initiatives of the crown prince.
As reported by Business Insider