Low crude oil prices in the market are creating roadblocks for Saudi Arabia’s grand plans of improving the nation’s economy. It wants to balance current large budget and also get valuation of $2 trillion for its oil company Saudi Aramco IPO. But both these projects are in a limbo as due to sluggish oil prices. The nation’s decision to replace current oil minister with a new one reflects the urgency it is under to boost market prices before upcoming IPO of Armco. Likely to be the nation’s largest listing in history it is also expected to fund Vision 2030 to diversify national economy and reduce dependence on oil.
The steps taken by Saudi’s government shows how desperate they are to increase oil prices say strategists. The appointment of Prince Abdulaziz bin Salman bin Abdulaziz al-Saud as oil minister marks the first time that a member of the royal family has been assigned a position in oil ministry as Abdulaziz is the son of current king Salman and half-brother of Crown prince Mohammed bin Salman. But Abdulaziz bin Salman played down the reshuffle though the position has made him one of the most important persons in the country.
Speaking at World Energy Congress in Abu Dhabi early this week he insisted that as a civil servant he is just fulfilling his duty and working for the government. There is nothing radical about the change as in an organization people come and go. He has deep experience in the ministry and will replace Khalid Al Falih who organized agreement between OPEC and Russia to reduce production. But the brunt of the production cuts was borne by Saudi Arabia. Though the agreement has stabilized prices a bit and they are not sinking down, they have not reached the historical levels that Saudi Arabia is expecting.