A millennial has taken over Saudi Arabia's oil policy and people have serious concerns

King Salman is technically the ruler, but Prince Mohammed is the favoured son, and he is increasingly calling the shots on some pretty important events

Prince bin Salmon announcing his Vision 2030 economic reform plan in April 2016 (AFP)

Saudi Arabia is desperately trying to diversify its economy away from oil, and the person pulling the strings is 30-year-old Deputy Crown Prince Mohammed bin Salman.

King Salman is technically the ruler, but Prince Mohammed is the favoured son, and he is increasingly calling the shots on some pretty important events.

He is quite possibly the most powerful millennial in the world, and he is now driving forward Vision 2030, Saudi Arabia's plan to curtail the kingdom's "addiction" to oil.

But there are growing concerns among economists and observers that Prince Mohammed could be out of his depth.

Prince Mohammed has built influence since his father came to power in January 2015, and this month he made it clear that his word is law when he gave the message that there would be no freeze in oil production without Iranian participation.

That Doha, Qatar, deal, or lack thereof, was enough to move the world markets. Prince Mohammed is not afraid to undermine other politicians' authorities to get his way.

But this is ostracizing the technocrat Saudi diplomats who are crucial to achieving Vision 2030. Without the old guard that has executed Saudi economic policy for decades, Prince Mohammad could struggle to get things done.

The millennial who is changing Saudi's traditional decision-making

Paul Sankey, a senior analyst at Wolfe Research, told the Financial Times in April that because of Prince Mohammed's young age — Sankey specifically calls him a "millennial" — he is pushing "the 'old guard' Saudi traditions" aside, "notably of behind-closed-doors consensus decision-making."

"He is offering the opposite, speaking at length to the Western press about policy-in-the-making," Sankey said.

"Most stunningly, the potential IPO of Aramco," the Saudi state-owned oil company, "but also, in more veiled language, the market-share war versus Iran ... [the Prince] appears to be more than ready to use oil as a weapon."

This is sidelining technocratic politicians like Ali al-Naimi, who has been the Saudi oil minister for more than two decades. Alexander Novak, Russia's energy minister, this week cut down Naimi by saying he "didn't have the authority" to negotiate a deal in Doha.

This is a huge deal because Prince Mohammed and the Saudi kingdom need those technocrats to make Vision 2030 come true.

The country reported in December that its 2015 budget deficit — the amount by which expenditures exceeded revenue — hit $98 billion (£65.7 billion). Oil prices have dropped from highs in the triple digits in June 2014 to about $40.

Oil revenues make up 77% of the country's total revenue, and because of the severe drop in oil prices revenue is down by 23% on the previous year.

As a result, for the second time in four months the ratings agency S&P has downgraded Saudi Arabia's debt rating, which makes it more expensive for Saudi Arabia to borrow money. The country is reportedly also asking banks for a loan of up to $10 billion (£6.8 billion).

Lagging behind on diversifying the economy away from oil

In an interview with Al Arabiya news on Monday, Prince Mohammed discussed expanding the country's Public Investment Fund to $2 trillion (£1.3 trillion), up from $160 billion (£110 billion), adding that it would "become a hub for Saudi investment abroad, partly by raising money through selling shares in Aramco."

But not everyone is convinced.

"There was very little that was new in the Saudi government's 'Vision 2030' and there are still several key areas that policymakers have yet to address," Jason Tuvey, an economist for Capital Economics' Middle East division, said in a note to clients.

"We don't buy into Mohammed bin Salman's assertion that Saudi Arabia will no longer be dependent on oil by 2020. In short, we were hoping for more."

Andy Critchlow at Breakingviews also highlights how Prince Mohammed's "grand vision to execute a similar rebalancing" of the economy as Dubai undertook in the 1980s "is blurry."

He said that while cutting state subsidies on electricity and creating a sovereign wealth fund was a good idea, Prince Mohammed needed to "target more radical reforms" to make Vision 2030 a reality.

The country "probably needs to address criticism over its human rights and social equality record" to improve the "link between openness and investment," he added.

Saudi Arabia is already struggling to complete its cornerstone investment in economic diversification. The King Abdullah Economic City was initially announced by King Abdullah bin Abdulaziz Al Saud in 2005. It is a $95 billion (£67 billion) supercity that the Saudis hope will draw from both Chinese manufacturing and Western tech innovation.

Plans call for the city to eventually have 2 million residents across 70 square miles — the equivalent of Washington, D.C. The project is not expected to be completed until 2035 and has had huge hiccups along the way.

Fahd Al-Rasheed, group CEO and managing director of KAEC, even told Business Insider at the World Economic Forum in January: "It's entirely funded by the private sector and through foreign direct investment. It's completely private."

Basically, it's dependent on foreigners and its own private sector, which still depend on oil to give it cash.

So if the war between Prince Mohammed and the technocrats doesn't cool and more radical reforms aren't being undertaken, it looks as if Vision 2030 could be a damp squib.

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