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Saudi King installs prince as oil minister as Al-Falih ousted

September 09/ 10:43

Dubai. Saudi Arabia’s King Salman dismissed Energy Minister Khalid Al-Falih and replaced him with one of his sons, putting a royal family member in charge of oil policy in the world’s largest crude exporter for the first time.

Prince Abdulaziz bin Salman, a longtime top Energy Ministry official, is an older half-brother to the Crown Prince Mohammed bin Salman. It wasn’t immediately clear why Al-Falih was removed, but analysts and officials said the decision is unlikely to signal a change in the kingdom’s oil policy.

The overnight ouster caps a week that saw Al-Falih unexpectedly stripped of his responsibility for overseeing industrial development and removed as chairman of Saudi Aramco as the world’s most profitable company prepares for an initial public offering.

Al-Falih, who reportedly pushed back against the IPO, had been the face of OPEC diplomacy over the past three years in a struggle to counter the rising tide of U.S. shale oil that flooded markets. The new minister takes charge as the producers’ group and its allies, most notably Russia, try to bolster prices at a time when a raging trade war between the U.S. and China weighs on global demand.

 “The changing of ministers happen and it doesn’t mean change in strategy,” Suhail Al Mazrouei, oil minister of fellow OPEC member the United Arab Emirates, told Bloomberg TV in an interview on Sunday in Abu Dhabi.

“Prince Abdulaziz is very decisive, he has a strong personality when it comes to the market. He understands the benefits to all the producers of the leadership role of Saudi Arabia to balance the market and I am not expecting changes,” he said.

The prince wasn’t part of the top team that helped the crown prince launch his sweeping economic reforms in 2016 but was promoted to state minister for energy affairs a year later. In that 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.

A Russian official said his country intends to maintain its critical oil alliance with Saudi Arabia even after the removal of Al-Falih, who had built a strong relationship with Russian Energy Minister Alexander Novak. The official, who asked not to be identified, said Prince Abdulaziz has played an important role to boost cooperation between the two countries.

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, told Bloomberg.

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. The king also appointed another son, Prince Khalid Bin Salman, as deputy defense minister after serving as ambassador to the U.S.

Analysts said they don’t expect the kingdom’s priorities to be different under the new minister.

 

 

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