Abdulaziz bin Salman named new Saudi energy minister

Saudi Arabia's King Salman bin Abdul-Aziz has removed energy minister Khalid al-Falih, replacing him with his son, Prince Abdulaziz bin Salman, who had been serving as minister of state for energy since April 2017.

Abdulaziz bin Salman has spent his working life at the energy ministry, and is a half brother of the powerful heir apparent, Crown Prince Mohammad bin Salman.

Prior to his appointment as minister of state for energy, the prince had served as deputy oil minister with ministerial rank for close to two years, and as assistant oil minister before that for more than 20 years.

The royal decree announcing al-Falih's dismissal and the appointment of Abdulaziz bin Salman as energy minister was published by state news agency SPA late on Saturday night. Al-Falih had held the position since May 2016.

No official reason was given for the move. But al-Falih's position was undermined earlier in the week after his role in overseeing industrial development was transferred to a newly created ministry, and he was replaced as chairman of state-owned Saudi Aramco's board of directors by PIF governor Yasir al-Rumayyan, a close economic aide to the crown prince.

These were seen as measures aimed at speeding up an initial public offering (IPO) of up to five per cent of Aramco's value.

It is an open secret that several of Aramco's top technocrats were not keen on the planned IPO, and al-Falih, who rose through the state energy giant's ranks to become chief executive, before becoming oil minister and chairman of the board, was seen as part of its culture.

Al-Falih was also spearheading Saudi Arabia's policy of reining in crude output to shore up prices, and coordinating output restraints with a group of non-Opec producers, led by Russia, to reduce commercial OECD stock builds and rebalance the global market.

It remains unclear whether al-Falih's removal and his replacement by Abdulaziz bin Salman signals a change of direction in Saudi Arabia's oil production policy.

Opec and their non-Opec producer allies, known collectively as Opec+, have not formally specified what price they are targeting, but officials from some key participating countries have said that they would like to see prices at around $70/bl. The IMF forecast Saudi Arabia's fiscal break-even price at $85/bl for 2019, and $78/bl for 2020.

Given that Abdulaziz bin Salman will not be chairman of Aramco's board, he is unlikely to be actively involved in the planned Aramco IPO, and the ministry's role will almost certainly focus on overall production policy and regulating the oil, gas and electricity sectors.

The new minister has also been heavily involved in policies and measures aimed at improving energy efficiency in Saudi Arabia.