HOUSTON – As King Abdullah bin Abdulaziz was laid to rest and his brother Salman became king of the world’s top oil exporter, Brent crude oil rose on Friday to a high of $49.80, up $1.28/bbl, before easing to around $49.20.
The King was swift in naming his heirs, specifically his half-brother Muqrin and nephew Mohammed bin Nayef as Deputy Crown Prince. Saudi King Salman pledged continuity in energy and foreign policies in his first speech as king, Reuters reported, and his pledge to maintain the same approach to ruling the world’s top oil exporter helped calm the market.
"There was only a spike in prices over these tensions and they eased afterwards," Hans van Cleef, senior energy economist with ABN Amro, said to the news agency.
The continuity of OPEC’s policy of keeping oil output steady is to protect the cartel’s market share from rival producers, according to the new king’s policy.
With oil prices dropping by almost 60% since peaking last June and the US maintaining its output of more than 9 MMb/d, many members of the 12-member OPEC wanted to cut output in order to support prices and revenues. Yet, Saudi Arabia announced last November that it would keep output steady at 30 MMb/d, Reuters reported.
Analysts “remain bearish on the outlook for oil and this view was echoed by Saudi Prince Alwalees Bin Talal, who told CNBC news that in his view the market had further to fall: ‘We have not seen the bottom yet, maybe,’ Reuters reported.
During his rule, King Salman is expected to focus on creating jobs and big infrastructure projects to prevent falling oil prices from causing social tensions or undermining business confidence.