A report by the American Bloomberg website wondered whether the appointment of Saudi King Salman bin Abdul Aziz, his son, Prince Abdul Aziz, as energy minister, will change the country's policy in this field and affect the Kingdom's plan for the initial public offering of the giant Aramco?
Prince Abdul Aziz's appointment as energy minister after the dismissal of Khalid al-Falih put all the pillars of the kingdom's oil policy under the control of the ruling family, the report said.
The report added that although the Saudi monarch has always been in charge of decision-making regarding government strategy in this regard, civil servants have headed the oil ministry since its establishment six decades ago.
Crown Prince Mohammed bin Salman is also chairing a committee overseeing Saudi Aramco's business, while the head of the sovereign wealth fund and ally Crown Prince Yasser al-Rumayyan is chairman of Aramco.
Such changes would enable the Saudis to manage the country's oil policy, but the royal family will be blamed directly if there is no minister to take responsibility for the pitfalls of oil strategy decisions.
Abdul Aziz is the eldest half-brother of Crown Prince Mohammed bin Salman, and these years spent by Prince Abdul Aziz in the Ministry of Energy in preparing him for the top post.
| Bloomberg: Al-Falih's worst failure is its inability to keep oil prices high enough to support government spending in Saudi Arabia (Reuters) |
The priorities of the new minister
The top priority for the new energy minister, according to the Bloomberg report, is to promote an oil policy that would raise prices to a rate that would maintain a balance of government spending - a price that is about $ 25 a barrel higher than it is currently.
This task is all the more urgent as Crown Prince Mohammed bin Salman leads a reform plan to renew the economy and form new industries to rid the country of its dependence on oil.
In addition, higher prices will support a 5% increase in the value of Saudi Aramco's oil shares, according to the Bloomberg report.
What is at stake?
The writer pointed out that the worst failures of Saudi Energy Minister Khaled al-Falih is the inability to keep oil prices high enough to support government spending.
He pointed out that the price of sixty dollars per barrel of Brent crude oil was not enough to finance the Saudi budget, which needs prices equivalent to eighty dollars or more per barrel.
Al-Falih was the architect of OPEC Plus policy, where he met frequently with his Russian counterpart Alexander Novak to add a series of measures within the group and pressure countries to commit to their role in the deal.
Therefore, as the Bloomberg report says, Prince Abdul Aziz must maintain these relations in order to protect politics, or convince other parties of the need for change.
Options for Saudi Arabia
At a time when analysts seem divided over OPEC's need to maintain production cuts or increase production cuts, Saudi Arabia is likely to exert some pressure for consensus on further cuts, according to a Bloomberg report.
The report also added that the Kingdom may fail to support prices for several reasons; the most important of them: the potential rise in oil shale production in the United States, and the risk of the rest of the OPEC Plus countries to increase production.
The writer quoted analysts as saying that OPEC needs to further reduce production by about one million barrels per day by 2020.