Succession to the throne was smooth in Saudi Arabia, still the most important oil-producing country on the planet. But beyond that, the ascent of crown prince Salman after the death of king Abdullah does not inspire confidence.
One reason is talk that Salman, who is 79 years old, suffers from dementia. Another is that the new crown prince, Muqrin, is rumored to have reached his position more for his pliability than executive competence—he may not be up to the job as king, should he eventually be called upon to take it. In fact, one bit of speculation is that Salman, who can choose his own crown prince, will relatively quickly put his own favorite in line.
None of this clears up the Kingdom’s quandary (some will call it a future crisis), which is that the end of the second generation of male offspring of king Abdul Aziz, Saudi Arabia’s founder, is upon us. Neither the deceased king Abdullah nor anyone else has put in place any known plan for what comes next.
This is not an academic nor trivial question: despite the rise of shale oil and OPEC’s current capitulation to markets, it would be foolhardy to buy into the intellectual fashion that OPEC’s—and Saudi Arabia’s—influence are dead. OPEC still controls some 40% of the world’s oil supply—the largest single block by far—and Saudi Arabia remains the cartel’s leader.
As a case in point, the current turmoil in global oil was triggered only technically by US shale oil—in reality, oil plunged precisely at the moment it became publicly known that Saudi Arabia, recognizing there was a shale-led oil glut, had decided to steeply discount its crude and allow the market to take over setting the price.
It is no exaggeration to say that Saudi stability is crucial to the stability of the global economy. And Saudi influence is not confined to oil. Notwithstanding recent friction with the US over policies toward Iraq, Syria, and Israel, the Saudis remain a crucial ally on security and diplomatic issues around the globe.
Tonight, the oil market will praise Riyadh for the smooth transition. But tomorrow, all will ask what comes next.