The death of Saudi Arabia's King Abdullah bin Abdel-Aziz is unlikely to see any short-term change in Saudi oil policy.
Current oil minister and former head of state-owned oil firm Saudi Aramco, Ali Naimi, had been oil minister for a decade when Abdullah formally became king. He has enjoyed a close relationship with Abdullah and it remains to be seen if he will continue in post. Naimi has enjoyed an almost free hand in running the country's oil policy, although he has kept the king and crown prince closely informed of all his decisions.
It is unclear if Saudi Arabia's new king will retain Naimi as oil minister, or if he will seek to appoint a new oil minister as and when he reshuffles the cabinet. Abdullah's successor, his brother and heir apparent, Prince Salman bin Abdel-Aziz, is unlikely to opt for a change on oil policy. The Saudi cabinet, which he has been chairing on behalf of King Abdullah, has publicly endorsed the Opec decision, strongly advocated by Saudi Arabia, to avoid an output cut despite a supply glut. The policy overseen by Naimi to ride out low oil prices in the hope of knocking more expensive producers out of the market and defending market share is likely to take over one year, and possibly two, before its results are obvious. The Saudi political establishment is averse to quick sharp changes and favours continuity.
The same continuity is likely to apply to Saudi foreign policy. Riyadh is likely to continue to work for the overthrow of the regime of Syrian president Bashar al-Assad, and to oppose what any strengthening of Iran's regional sphere of influence.
But Saudi Arabia is improving its relations with Iraq's Iranian-backed government, and has announced that it will reopen its Baghdad embassy. This can be seen as part of Riyadh's opposition to the Islamic Isis-led insurgency, and Saudi Arabia's realisation that Isis is a direct threat to itself. This threat was underlined on 5 January when Isis mounted its first attack on Saudi Arabia. The attack was minor, but a clear wake-up call that Isis has Saudi Arabia in its sights.
The collapse in crude prices since mid-2014, means that the Saudi government is budgeting for oil revenues to fall by 32pc to 715bn riyal ($190.3bn) in 2015. But it is adamant that it has the financial reserves to sit out a period of low oil prices and the cabinet approved a SR860bn budget for 2015 on 25 December that represents a 0.6pc increase above budgeted expenditure in 2014, although 2014 actual spending will be 28.7pc above budget at SR1.1 trillion. Actual expenditure usually exceeds budgeted expenditure by around 25pc.
The death of Abdullah, who had been ill in hospital with pneumonia, was announced occurred in the early hours in Saudi Arabia today in a statement issued by the Saudi royal court and broadcast by state-run Saudi television. Abdullah's funeral and burial are to take place this afternoon, in keeping with Islamic tradition.
"The royal family has already pledged allegiance to Salman as king," the statement said. "Citizens are expected to pledge their allegiance to King Salman later on Friday."
King Salman called on Saudi citizens to pledge allegiance to his half-brother and deputy crown prince Miqrin bin Abdul-Aziz as crown prince and heir apparent. The late King Abdullah had named Miqrin as successor to Salman under an agreement between the two men. But it is the reigning king's prerogative to over-ride any decisions made by his predecessor, so by calling on citizens to pledge allegiance to Miqrin as his successor, Salman is reaffirming the agreement he made with the late King Abdullah regarding the succession.
Abdullah had formally reigned since succeeding his brother, the deceased King Fahd bin Abdel Aziz, on 1 August 2005. But he was effective head of state since 1995, because King Fahd was in ill health.
Born in 1924, Abdullah was the sixth monarch of Saudi Arabia. Like his predecessors, he carried the title of "custodian of the two holy mosques" — a conciliatory gesture to the country's powerful clerical establishment, which ruled that the word "majesty" was one of God's attributes and therefore not appropriate for the head of state. The title also reinforces the image that Saudi Arabia likes to project, that of the leader of the Islamic world. Abdullah was also prime minister and commander of the National Guard, an elite military force that he had headed since 1962.
He was considered an economic and social reformer, although some of his efforts at social reforms were hampered by the powerful clerical establishment. His attempts at social and economic reform were bolstered by rising oil prices, which enabled the country to increase spending massively on a range of economic and infrastructure projects.
Abdullah also oversaw a reorganisation of Saudi Arabia's judicial system, establishing a council comprising some of the senior Al-Saud family princes to oversee the succession. But he bypassed the council when naming his successor, Prince Salman bin Abdel-Aziz — a half-brother — and Prince Salman's successor, Prince Miqrin bin Abdel-Aziz, another half-brother. The move to name two successors was an attempt to ensure political stability around the issue of the succession. But it only staves off the controversy over how the succession will move to the third generation of princes, the grandsons of King Abdel-Aziz.
The deceased king was keen to advance the cause of women in Saudi Arabia, voicing support for allowing women to drive. He backed down after strong objections from the clerical establishment. But he succeeded in naming some women as members of the unelected Shura consultative council. The council's decisions are not binding but are influential.
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