Sep 7, 2019

Saudi Arabia's oil minister is out in a major shake-up

Khalid al-Falih. Photo: Anadolu Agency / Contributor/Getty Images

Saudi Arabia has jettisoned Energy Minister Khalid al-Falih in a major shake-up of energy leadership in OPEC's most powerful crude oil producer.

Driving the news: Saudi state media announced that he's being replaced with Prince Abdulaziz bin Salman. He's Crown Prince Mohammed bin Salman's half-brother, according to Bloomberg.

Why it matters: The move comes as the kingdom is grappling with the rise of U.S. production and other forces that have held down the price of oil, the country's dominant revenue source.

  • It also comes amid revived preparations for the IPO of state oil giant Aramco.
  • The royal decree replacing al-Falih arrives just days after he was removed as board chairman of Aramco.

The big picture: Al-Falih, who was appointed in 2016, has been among the most prominent figures in global oil markets. During his tenure, OPEC began a joint production-limiting pact with Russia in an effort to tighten up global markets — an ongoing agreement that has had mixed results.

  • Per the Financial Times ($), "Abdulaziz, the new energy minister, joined the oil ministry in the 1980s and served in several positions including deputy minister and most recently as minister of state for energy affairs, a position he held since 2017."

Go deeper: Saudi Aramco replaces chairman as oil giant prepares for massive IPO

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The Saudis' crude oil price challenge

Data: U.S. Energy Information Administration; Chart: Axios Visuals

One big challenge facing Saudi Arabia is that crude prices are well below the roughly $80–$85 per barrel the country needs to balance its budget.

The big picture: Saudi Arabia shook up its oil hierarchy Saturday by ousting Khalid al-Falih as oil minister and replacing him with Prince Abdulaziz bin Salman. The kingdom is grappling with the U.S. production boom, sluggish global demand growth, and trade friction that's holding down oil prices.

Go deeper: Less than a year after Khashoggi murder, business booms for Saudi Arabia

Saudi oil sites hit by drone strikes: U.S. blames Iran

Smoke billowing from an Aramco oil facility following the Houthi attacks. Photo: AFP/Getty Images

Iran denied Sunday U.S. accusations that it was behind drone attacks targeting the world's largest oil processing facility at Abqaiq and a major oil field at Khurais in Saudi Arabia the previous day.

The latest: Yemen's Iranian-backed Houthi rebels claimed responsibility for the early Saturday strikes, AP reports. But U.S. Secretary of State Mike Pompeo blamed Iran, saying "there is no evidence the attacks came from Yemen." Iranian Foreign Ministry spokesperson Abbas Mousavi said in a statement the U.S. accusations were "blind, incomprehensible and meaningless."

Go deeperArrowUpdated Sep 15, 2019

Oil price spikes expected after attacks on Saudi facilities

Smoke billows from an Aramco oil facility. Drone attacks sparked fires at two Saudi Aramco oil facilities. Photo: AFP/Getty Images

Crude oil prices are expected to surge when Asian markets reopen Sunday night (U.S. time) as traders respond to Saturday's attacks against major oil processing and production sites in Saudi Arabia.

Why it matters: The alleged drone strikes, which took large volumes of production offline, are stark evidence of security risks facing OPEC's largest producer and the world's largest crude oil exporter.

Go deeperArrowSep 15, 2019