“The most powerful man in the world in the oil industry” , wrote the magazine Forbes in 2014 to about . Ali Al-Naimi, the Saudi oil minister, who is also the most influential man in the Organization of Petroleum Exporting Countries (OPEC), has was fired Saturday, May 7 He will be replaced with the boss of oil giant Aramco, Khalid Al-Faleh, appointed Minister of Energy, Industry and Mineral Resources, according to a decree of King Salman, who held a broad reshuffle of his government.
what consequences this departure he will have on the oil market? Saudi Arabia will she continue her solitary and aggressive strategy against Iran and US shale producers? Analysis of Thomas Porcher , oil economist and Professor at the Paris School of Business , author of the book “ 20 myths about energy. “
will the departure of Ali Al-Naimi have an impact on the Saudi oil policy?
He embodied the last twenty years the oil policy of the kingdom [Ali Al-Naimi became oil minister in 1995 after presiding oil giant Aramco, Editor's note] and had suggested it a few months ago his desire to leave his post. He led a policy in line with the royal will. And from this point of view the oil strategy of Riyadh should remain unchanged. Until 2014, Saudi Arabia produced by quotas to raise prices. Demand was strong, and choosing to scarce supply, Saudi Arabia, which has the largest oil reserves in the world, was up prices. Then in 2014, shale producers in the United States arrived. Riyadh then chose to flood the market to keep its shares and weaken US oil. Prices then dropped because of this aggressive strategy Saudis and a weakening demand (the price per barrel was $ 100 in early 2014 fell to around $ 45 now after having fallen below 30 dollars in January, Editor’s note ).
This price drop is less painful for the Saudi Arabia because its oil is profitable from $ 20 per barrel against about $ 50 for oil American shale. And even if this drop digs the Saudi budget deficit (Riyadh recorded in 2015 a record budget deficit of 89 billion euros, Editor’s note), the Kingdom can rely on significant reserves (about $ 650 billion, Editor’s note). The departure of Ali Al-Naimi and should not lead to a change in strategy. This is also explained what his successor. So do not expect a rapid rise in oil prices.
What consequences this departure he has on OPEC?
the Saudi bearish strategy has meant to make life impossible for competitors from other countries, and OPEC member, like Venezuela [ beside the bankruptcy, the country increased the price the essence of 6.000%, Editor's note] , Algeria or Nigeria which about 90% of exports are hydrocarbons. The oil for these countries is not profitable from 80 or even $ 120 a barrel. The Saudis want to ensure that the Oil which is the most expensive to produce (shale, tar sands) so the market. They are thus facing growing criticism within OPEC. Their strategy is lonely and not collective as has been the case in the past. The failure of the Doha meeting in mid-April was the illustration of it . This meeting demonstrated that OPEC no longer works. There is a real risk of the organization split if low prices continue, this should be the case even a year and a half.
in addition to this aggressive strategy, Riyadh comes also to adopt a plan called “vision 2030″, to diversify its economy and reduce its vis-à-vis oil dependence. That you surprised?
What surprises me is the partial privatization (less than 5%) of Aramco announced by the Saudis as part of this plan. This national company has historically been the military arm of the Saudi policy. It is overkill. And that decision, even if it will bring a lot of money, runs counter to what Saudi Arabia for several years. Riyadh sends two signals that are almost an admission of weakness within OPEC: there is a post-oil and especially Saudi Arabia seems to be willing to not play its leadership role in the cartel. If Aramco becomes a private company, which is still very far from being the case, it will then have no incentive to reduce output. She will want to win the most money right away. C e are signals that announce a more competitive world market and especially a more fragmented OPEC, without real policeman.
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