Saudi Arabia will probably keep producing crude at near-record levels under its newly appointed oil minister, Khalid Al Falih, as the world’s largest exporter sticks with his predecessor’s policy of defending market share against higher-cost shale.
Advertisement
Khaled al-Falih, chairman of Saudi Aramco, will serve as the minister of the newly formed Energy, Industry and Natural Resources ministry.
New energy minister, Khalid al-Falih, said Saudi Arabia will maintain its stable petroleum policies and maintain its role in global energy markets as “the world’s most reliable supplier of energy”.
Ahmed AlKholifey, named to the role in a royal order from King Salman, was previously deputy governor for research and global affairs at the central bank, the Saudi Arabian Monetary Agency.
Until last month, oil had seen one of the strongest rebounds since the financial crisis, with prices rallying almost 80 percent from multiyear lows under $30 in the first quarter, supported by falling USA production, supply constraints in Libya and the Americas and a weak dollar.
The 13-member oil cartel has repeatedly refused to cut supply despite the slide in prices, as Saudi Arabia sticks to its strategy of leveraging its low-priced production to squeeze out higher-cost USA shale oil producers.
A European diplomat said the new broader ministry reflects the government’s desire to develop other sources of energy besides petroleum. He was named oil minister in 1995 by Saudi King Fahd bin Abdulaziz Al Saud.
Crude prices extended gains in Asia on Monday as raging wildfires hit production in Canada, while traders digested news that Saudi Arabia had replaced its oil minister. Last month, at the meeting of OPEC and non-OPEC ministers in Doha, he compromised with an agreement to freeze production if Iran agreed to do so as well.
Unveiled two weeks ago, the Vision 2030 plan involves selling up to 5 per cent of Aramco, the world’s largest oil production company, via an initial public offering.
According to Platts, Saudi Arabia maintained output at 10.2 million barrels per day for the third straight month in March.
“Al-Falih has said he will continue [Saudi Arabia’s intention of allowing] the market determine the market and not have the old days of OPEC trying to manage the market”, Yergin said.
“In some ways, (Mohammad bin Salman)’s oil policy appears to be an extension of his provocative foreign policy efforts to roll back Iranian influence (including the costly Saudi military intervention in Yemen). We remain committed to maintaining our role in worldwide energy markets and strengthening our position as the world’s most reliable supplier of energy”, Khalid al-Falih said on Sunday.
This is big and could lead to very volatile oil markets in the near term.
Advertisement
From now the wording of him, will be the key for oil market and for now, he says diversify and no action without Iran.
