SAUDI: Royal appointed as energy minister

GULF COUNTRIES - In Brief 08 Sep 2019 by Justin Alexander

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At the end of a dramatic week of changes in the Saudi energy sector, Abdulaziz bin Salman al Saud, the half-brother of the crown prince, Mohamad bin Salman (MBS), was appointed as energy minister, the first time a royal has held this portfolio. Khalid al-Falih was replaced as energy minister after just three and a half years. His removal came through a series of cuts over 10 days, first taking away his industry portfolio and then his chairmanship of Aramco, perhaps in an effort to gauge the market and domestic response, which was relatively muted. Finally he was replaced as minister in a decree reported at 1.30am local time on Sunday (SPA). His term was unusually short term and his predecessor Ali al-Naimi served for 20 years and 3 kings. There are reports that he had fallen out of failure for insufficient enthusiasm for some of MBS’s signature policies, such as the Aramco IPO. However, he was well regarded internationally and had developed a particularly strong working relationship with his Russian counterpart, which had helped anchor the OPEC+ cuts. Therefore, the change could create some uncertainty about whether Saudi Arabia will be able to maintain the alliance, at a time when overproduction by countries such as Nigeria and Iraq is putting strain on the deal. Indeed, there could be questions in the market about whether Saudi Arabia remains committed to the strategy, which has seen it bear a disproportionate share of the burden (it is currently cutting output by triple its pledge). Indeed, Falih was appointed as minister in 2016, when oil was near its cyclical low, precisely to manage a transition from the previous policy of high production to squeeze US shale to t...