Saudi Arabia's new energy minister faces his first crisis.
Saudi Arabian Prince Abdulaziz became the first member of the ruling family to head the powerful energy ministry last month, at the behest of his father, King Salman. Days later, more than half of the kingdom’s oil production was knocked out by pre-dawn weekend attacks, sending oil prices soaring.
Ironically, Abdulaziz gained his new post after his predecessor, Khalid Al-Falih, the de facto leader of OPEC, struggled to get oil prices to rise amid a worldwide glut.
The move to appoint Abdulaziz further concentrates authority around Mohammed bin Salman (MBS), the crown prince, and adds to signs of renewed efforts to push key elements of his reforms, says Jason Tuvey, senior emerging markets economist at Capital Economics. “Admittedly, there are few concerns over [Abdulaziz’s] credentials, given that he has spent nearly all of his career at the energy ministry,” Tuvey says, noting that he is “well-respected in the energy community.”
Abdulaziz is expected to enthusiastically support the initial public offering of a minority stake in Saudi Aramco, a cornerstone of Vision 2030, which states: “We believe that Saudi Aramco has the ability to lead the world in other sectors besides oil.”
Diversifying the oil-based Saudi economy is vital for its sustainability. Abdulaziz has been directly involved in talks with the US to bring nuclear technology to the kingdom. He has also been actively involved in renewable energy, and has wholeheartedly supported the domestic energy-reform agenda, which has reduced waste and ended subsidies.
Abdulaziz was the driving force behind the long-term charter of cooperation signed in June by OPEC and non-OPEC oil exporters, including Russia. He likes to work behind the scenes to make things happen, whereas his predecessor enjoyed being in the media spotlight.
Meanwhile, the chances of an outright war between Iran and Saudi Arabia and its Gulf allies have risen. “In the event that war does erupt, we think the oil price would probably spike to $150 per barrel,” Tuvey says.