Saudi King Abdullah's Health Could Be A Game-Changer For Oil Policy

King AbdullahReutersSaudi King Abdullah bin Abdulaziz al-Saud in June.

Saudi Arabia’s 91-year-old king, King Abdullah bin Abdulaziz, is in the hospital for “medical checks” in Riyadh, according to Al Jazeera America

This isn’t super surprising. King Abdullah’s health has been deteriorating for quite a while, and his half brother Salman, who is 79 and next in line to the throne, has been representing him at events recently. 

But the Saudi succession question brings up real questions about the country’s oil policy.

It has, so far, refused to cut oil production to stop prices from falling further, preferring to let the market run its course. But that could change at any time, and may very well if there is a transition period related to succession soon.

Emad Mostaque at the emerging markets consultancy Ecstrat outlines the basic issue

Oil prices are now at levels that cause real concern on the streets of Saudi Arabia, with the prospect of succession the icing on top that has caused retail investors to take the market down another leg.

This policy may not make it through a succession period, where public support and good will is essential, particularly as it has nearly been 20 years since the last change.

The new regent could decide to keep existing policy, change it completely or anything he decides. Similarly he has free reign to realign Saudi Arabia’s foreign policy as he wishes, which is a discussion for another time and place, but could have significant regional impacts.

So the health of King Abdullah is definitely something to watch going forward.

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