Many market watchers are wondering what the succession of King Salman to Saudi Arabia’s throne will mean for global oil prices, as the massive oil producing country’s influence is critical to the current dispute over that dramatic side in oil price prices. CCTV America’s Owen Fairclough reported this story from Washington, D.C.
Smooth Saudi royal succession belies oil turbulenceMany market watchers are wondering what the succession of King Salman to Saudi Arabia's throne will mean for global oil prices, as the massive oil producing country's influence is critical to the current dispute over that dramatic side in oil price prices. CCTV America's Owen Fairclough reported this story from Washington, D.C.
King Salman bin Abdulaziz Al Saud has taken the throne amid a stunning price slump in its main export, crude oil. The global price briefly shot up upon the death of Salman’s predecessor, King Abdullah.
Despite this, the price remains stuck at a six year low, at about half its price from six months ago, and analysts do not anticipate the situation changing.
“It’s very much anticipated they will remain as is, and we’ll see a continuation of over supply to the markets, certainly for the foreseeable future,” one IG analyst said.
Saudi Arabia is the world’s biggest exporter of oil, accounting for one-tenth of the global supply.
Ali Al-Naimi, Saudi Arabian minister of petroleum and mineral resources, kept his post in the succession and has been vocal in his refusal to cut production. Al-Naimi fears countries outside the Organization of the Petroleum Exporting Countries oil cartel such as the U.S., Brazil, and Russia will take Saudi Arabia’s market share if production is cut. He blames those countries for the current situation.
“Saudi Arabia with OPEC countries tried to restore the balance in the market, but the lack of cooperation from countries outside OPEC, in addition to the speculators and the spread of incorrect information, led to the fall of prices,” Al-Naimi said in Dec. 2014.
Even with the economic growth forecast at a healthy 4.5 percent this year, the International Monetary Fund thinks falling oil prices will reduce Saudi Arabia’s government spending, albeit slowly. However, there are plenty of customers for Saudi oil. China is the biggest customer and intent on developing stronger ties as Saudi Arabia pivots east.
Jean-François Seznec discusses economic impact of Abdullah’s death
CCTV America’s Phillip Yin interviewed Jean-Francois Seznec, a professor at Georgetown and John Hopkins University about how the global economy will be impacted by Abdullah’s death.