Saudi Arabia is set to use surplus oil revenues to bolster the financial firepower of its $230bn Public Investment Fund, the sovereign wealth fund driving crown prince Mohammed bin Salman’s economic modernisation efforts. Should oil prices exceed the level required to balance the Saudi budget, any extra revenues would be funnelled into the PIF, said Mohammed Al Tuwaijri, the kingdom’s minister of economy and planning. “Whenever oil is above our break-even point, this will all go to the PIF,” he said in an interview, without disclosing what the kingdom regards as the level at which the fiscal balance is zero. “So in that sense they will have a lot of funding hopefully.”

The shift in strategy puts the young crown prince — who has cracked down on corruption and plans to transform the oil-dependent economy — more directly in control of funds that have historically been managed by the central bank. The International Monetary Fund said last year that Saudi Arabia needs oil prices to be at $70 a barrel in 2018 to break even, which is above today’s price of $63.90 a barrel. Mr Tuwaijri’s comments shed some light on how Prince Mohammed, the heir to the throne, is overhauling longstanding government processes.

With about $500bn in reserves, the Saudi Arabian Monetary Authority has been the traditional custodian of the kingdom’s wealth, investing in conservative instruments such as bonds. Shifting the balance of financial power from the central bank — a conservative institution and decades-old bureaucracy — towards PIF should allow the kingdom to magnify returns on investment overseas through big bets on global companies. It will also enable greater investment in schemes designed to diversify its oil-dependent economy. Mr Tuwaijri’s remarks also imply the kingdom will continue to manage the oil market through production cuts. Although the kingdom has long maintained it does not have a price target, since 2016 Saudi officials have been briefing privately about a need to prop up prices to fund social and economic reforms.