RIYADH: International crude oil prices dropped to $44.05 yesterday amid market uncertainty generated by the removal of Saudi Arabia’s long-serving oil minister, Ali al-Naimi. The global cocktail of factors helped push Brent, the international crude benchmark, down 0.61 per cent to $44.05 for July cargoes and its U.S. counterpart West Texas Intermediate up 0.2 per cent to $44.76 for June cargoes.
Though some analysts expected a Saudi Arabian reshuffle at some point, the timing of the appointment of Khalid al-Falih, chairman of state-owned oil company Saudi Aramco, took the market by surprise.Analysts were split over what the reshuffle will mean for the oil price in the long term.
To some, the removal of Naimi is a reaffirmation that 31-year-old Deputy Crown Prince Mohammed bin Salman is the person driving Saudi Arabia’s energy policy. Some officials at the Organisation of the Petroleum Exporting Countries said that could mean a deeper politicisation of oil-production strategy as the kingdom looks to outmanoeuvre its rival Iran, which is trying to come back from years of Western sanctions with a surge in output. That could make coordinating oil-production curbs harder.
An attempt to curb global output was foiled last month when Saudi Arabia refused to take part because geopolitical rival Iran wasn’t involved. “Iran has always been a big competitor for Saudi, even during sanctions as Iran was still exporting over one million barrels a day to Asian countries,” said Amrita Sen, chief oil analyst at Energy Aspects.
