King Abdullah of Saudi Arabia has died.
The king, who took power in 2005 after the death of his brother King Fahd, has been in hospital since December being treated for pneumonia.
79-year-old Saudi Crown Prince Salman, Abdullah’s half-brother, has been named king, according to a report from AFP.
Salman is also reportedly in poor health.
The Saudi king, known in the kingdom as “the custodian of the two holy mosques” is one of the most powerful world leaders because of Saudi Arabia’s special place in Islam and the country’s vast oil resources.
Abdullah assumed the throne in 2005 as the country’s sixth king.
The Saudi dynasty has been showing cracks since the transition of kings became a impending matter.
Over the last six decades, the succession mostly passed brother to brother in order of their age. But the last of the current line of brothers will die soon, passing power to the third generation of the family.
Earlier this month Rick Gladstone of the New York Times noted that, “Placing Crown Prince Salman and Prince Muqrin in line to succeed Abdullah effectively delays the time of reckoning when the next generation of princes, the founder’s grandsons, will be moved into positions of high authority.”
Crude oil spiked on global markets, rising almost 2% in the minutes after the announcement.
The Saudi succession question brings up real questions about the country’s oil policy.
Saudi Arabia is the most powerful member of the OPEC oil cartel.
The conservative kingdom recently refused to cut oil production to stop prices from falling further, preferring to let the market run its course. That policy could change at any time, such as a situation in which the royal family wants to stir public support during a succession.
Emad Mostaque, a strategist specialising in geopolitics at the emerging markets consultancy Ecstrat, outlines the basic issue:
With oil prices under $50, the feeling on the ground in Saudi Arabia has been one of concern. After 19 years with of rule by Abdullah (9 as regent and 10 as King), there is significant pressure for the new King to secure the support of the populace through populist measures such as public sector wage increases with 90% of Saudis employed in the public sector (90% of the private sector is foreign) and additional handouts.
These may well include expensive measures such as free housing for young married couples and a potential consumer debt jubilee, where the government takes over payments (billions have already been shifted in this manner over the last few years).
Additional spending may be similar to the Arab Spring, meaning we could see an overspend of $50bn or more this year depending on the measures taken.
Michael Levi, a global energy expert at the Council on Foreign Relations, said in an interview earlier this month with Business Insider that succession may not have a big effect on policy, but could lead to a lot of political turmoil. “Either very little happens or a lot does,” he said.
Motasque also had some thoughts on the royal family’s succession.
While Salman has the ability to change succession (indeed under Saudi Basic Law and given his family backing he has the power to do anything he wishes), it is likely that Muqrin will remain the next in line.
After this, it will skip a generation, with the two main candidates for the throne still the defense minister Mohammad bin Nayef (55), the son of Salman’s full brother departed Crown Prince Nayef and head of the National Guard Mutaib (62), son of Abdullah.
As with the announcement of Prince Muqrin as Deputy Crown Prince, we may see an announcement in this regard sooner rather than later to assuage fears of potential rapid succession, although we are in a period where any agreements made under King Abdullah’s reign may be put to the test
This chart from The Washington Institute details the line of succession up to this point:
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