King Abdullah death: What to expect?

The passing of King Abdullah has caused a little spike in oil prices this Friday. Nevertheless, this trend should not last for long and shall go back to its soaring situation.

 

In fact, the new ruler, King Salman is expected to stick to the current oil policy of his predecessor, that is, to maintain oil-production high and force out small producers even at a lowering cost.

 

Saudi Arabia, one of the 12 members of the OPEC has the responsibility of protecting the organization cartel’s market share.

 

It is also said that no major change would intervene in the oil policy even if the current oil minister, Ali Al-Naimi might step down.

 

Policymakers had already planned for continuous pumping regardless of who could be the next king.

 

It is certain that Saudi leaders shall not repeat the 1980s mistakes whereby the country had cut its own output to support prices due to falling demand and rising supplies for non-OPEC.

 

Saudi Arabia was faced with double challenges from both lowered pricing and output. It seems that the same succession pattern of that of 2005 shall repeat itself.

 

When late king Abdullah took over the kingdom after the death of King Fahd in 2005, he maintained the existing policies of well-supplied oil.

 

Due to oil spirals, Saudi Arabia has witnessed its first budget deficit since 2009 and had to convince other OPEC members to follow the strategy of oil drop.


Source: Reuters

Priscilla Camryn By: Priscilla Camryn
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