Saudi Arabia’s king named his son Prince Abdulaziz bin Salman as energy minister, installing a royal family member at the helm of the kingdom’s oil policy for the first time.
Prince Abdulaziz, a longtime top Energy Ministry official, is half-brother to the Crown Prince Mohammed bin Salman, but the two aren’t believed to be close and are quite far apart in age. The prince replaces Khalid al-Falih, whose future had been uncertain over the past week after he was stripped of his responsibility for overseeing industrial development and removed as head of Saudi Aramco.
Al-Falih had been the face of OPEC diplomacy over the past three years, as the producers’ group joined other major producers, most notably Russia, in an attempt to counter the rising tide of U.S. shale oil that flooded markets. The new minister takes charge as the world’s biggest oil exporter tries to bolster prices at a time when a raging trade war between the U.S. and China weighs on global demand.
Prince Abdulaziz, who most recently served as state minister for energy affairs, is widely seen as a capable and experienced technocrat. In his former role, he oversaw a breakthrough in talks with fellow OPEC member Kuwait to resume output in the neutral zone between the two countries after a four-year halt.
“Prince Abdulaziz is a very seasoned veteran of Saudi and OPEC policy making,” said Bob McNally, president of Rapidan Energy Group. “He won’t have a learning curve. I don’t expect any big rupture in current Saudi oil policy or relations with Russia.”
Saudi Arabia has cut production to less than 10 million barrels a day as part of an agreement with the Organization of Petroleum Exporting Countries to limit output and support prices. The Saudis are doing the most to support the deal, pumping about 500,000 barrels a day less than they pledged.
OPEC and its allies, known collectively as OPEC+, are scheduled to meet on Sept. 12 in Abu Dhabi to review their strategy to help balance global oil markets.
Until Prince Abdulaziz’s overnight appointment, the oil ministry had been headed by civilian technocrats since 1960. His elevation concentrates more power within the immediate family of King Salman, who ascended to the throne in 2015.
His son, Crown Prince Mohammed, controls the levers of policy from security to energy and is known to be the power behind the throne. The king also appointed another son, Prince Khalid Bin Salman, as deputy defense minister after serving as ambassador to the U.S.
It’s not immediately clear whether the decision to promote Prince Abdulaziz reflects a desire to change oil policy as opposed to the king’s dissatisfaction with Al-Falih, who was reportedly pushing back against the possible initial public offering of Aramco.
Either way, McNally and other analysts said they don’t expect the kingdom’s priorities to be different under the new minister.
“The priority remains removing the lingering threat of another crude price swoon by preventing stock builds,” he said.
Following an eight-year stint as an adviser to the late Saudi Oil Minister Hisham Nazer, Prince Abdulaziz became Deputy Oil Minister in 1995, a post he occupied until 2004, when he was named assistant to the minister. He headed a team of ministry officials and Aramco executives to lay out and update the kingdom’s oil strategy, according to the ministry’s website.
He was also in charge of a committee to regulate domestic energy and water prices as part of the government’s plan to reduce subsidies.
Majd Dola, a portfolio manager at First Abu Dhabi Bank, said while the prince may bring “new tactics” to the negotiations over global oil policy, the forces affecting prices at the moment were beyond the kingdom’s control.
“If you look at oil from a macro perspective I don’t think at the moment we’re facing supply issue,” he told Bloomberg TV. “The trade war is weighing down on growth and that’s weighing down on oil.”
