SINGAPORE, Jan 23: Sauid Arabia’s new king is expected to stick to an OPEC policy of keeping oil output steady to protect the cartel’s market share from rival producers, even as energy markets face some of the biggest shifts in decades. Saudi Arabia’s King Abdullah died early on Friday and his brother Salman became king, the royal court in the world’s top oil exporter said in an official statement. Salman has named his half-brother Muqrin as his crown prince and heir, rapidly moving to forestall any fears of a succession crisis at a moment when Saudi Arabia faces unprecedented turmoil on its borders.
The new king is expected to broadly continue Abdullah’s policies, analysts say.
‘King Abdullah was the architect of the current strategy to keep production high and force out smaller players instead of cutting,’ said John Kilduff, partner, Again Capital LLC in New York.
Kilduff said that Salman was known as a defender of Saudi Arabia’s interests and that the market would expect him to keep production high.
FGE analyst Tushar Bansal said: ‘By and large, as of now no major change is expected in Saudi policies’ but he said the market would focus on whether Saudi Arabia’s oil minister might be replaced.
‘Ali Al-Naimi has been the oil minister since 1995. Previously, it was reported that he expressed a desire to step down, but King Abdullah asked him to stay on for as long as he is around.
‘So, the real question is, if there is a new oil minister soon, will it lead to a change in Saudi energy policy?’. Crude oil futures initially jumped on Friday but then came off highs and were still trading at levels more than 50 percent below their most recent peaks in June, 2014. LAST SUCCESSION
A continuation of existing policies would be in line with what happened after the last succession. In 2005, when King Fahd died, similar concerns over Saudi Arabia’s leadership emerged. Following the announcement of King Fahd’s death on Aug. 1 2005, Brent rose to an all-time high of almost $61 a barrel. Crown Prince Abdullah, who had effectively been in charge since Fahd suffered a stroke in 1995, was installed as new king and swiftly calming traders officials stressed that there would be no changes in an oil policy of keeping markets were well-supplied.
(AGENCIES)
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