Global leaders pay respects to Saudi King

The World Economic Forum in Davos has many themes and discussion topics but Friday's focus remained squarely on the passing of Saudi Arabia's King Abdullah with the global elite reacting to the overnight news.

Secretary of State John Kerry, who traveled to the Alpine retreat overnight, tweeted that King Abdullah was a man of "wisdom and vision," adding that the U.S. had lost a friend.

The Prime Minister of Malaysia, Mohd Najib Tun Razak, also offered his condolences as did U.S. President President Barack Obama, who was not at the event. In a statement from the White House he said that the U.S. and Saudi Arabia had worked together to confront many challenges.

"I always valued King Abdullah's perspective and appreciated our genuine and warm friendship. As a leader, he was always candid and had the courage of his convictions," he said.

King Abdullah
Brendan Smialowski | AFP | Getty Images

"One of those convictions was his steadfast and passionate belief in the importance of the U.S.-Saudi relationship as a force for stability and security in the Middle East and beyond. The closeness and strength of the partnership between our two countries is part of King Abdullah's legacy."

The U.K. government also offered their condolences with Prime Minister David Cameron and Foreign Secretary Philip Hammond both releasing statements. The latter said that King Abdullah had served the kingdown for many years with "great dignity and dedication."

"His contribution to the prosperity and security of the Kingdom and the region will long be remembered," he added.

Meanwhile back at Davos, Former U.K. Prime Minister Tony Blair said that King Abdullah "was loved by his people and will be deeply missed," according to a statement.

Early on Friday morning, state television in Saudi Arabia confirmed that King Abdullah had died of pneumonia. He was admitted to hospital on December 31, state media reported at the time, and his brother Crown Prince Salman bin Abdulaziz has now succeeded him as the new ruler.

Saudi Arabia is the world's top exporter of oil and one of the biggest producers and the news is likely to mean investors will be keen to see what the succession means for the commodity which has fallen by over 50 percent since mid-June last year.

"I don't think a change of leadership in Saudi Arabia will have a long-term impact on the oil price," Mark Malloch-Brown, a special adviser for FTI Consulting, told CNBC in Davos.

Daniel Yergin, IHS vice chairman, added that while the succession was "orderly" and "well planned," geopolitical risk in the region was now something to watch.

"In terms of the oil price, it is remarkable that a year ago, politics was in the price and now there is no geopolitics in the price and some of that may come back."

Brent crude oil rose on Friday amid uncertainty following the death of King Abdullah. Brent futures were last trading at $49.27 a barrel, around 75 cents higher on the day while WTI crude futures were at $46.28, dipping 3 cents.


Major US ally

Saudi Arabia is seen as a major ally to the U.S. in the Middle East and in the immediate term there is unlikely to be any disruption in that relationship, according to Stephen Yates, the CEO of DC International Advisory.

Nonetheless, he told CNBC Friday that with any transition there are always questions.

"In recent years the kingdom has taken a decisive turn in its posture with regards to Syria, its concerns about Iran, and it has been a little more activist about keeping these threats out of the kingdom itself," he said.

"And now that we have turmoil boiling over in Yemen I guess the questions are, in the immediate term how can the world leaders coordinate with the kingdom in their period of mourning and also operational issues they may face."

Firas Maksad, the managing director at Global Policy Advisors, added that the Saudis have been upset with the recent thaw between U.S. and Iranian relations, saying that the U.S. has acted "behind their back."

"That has built a level of distrust and that will continue with King Salmon, who has been building his international (relationships) with visits to other countries, like China. The U.S. remains indispensable in Saudi policy but there may be a degree of re-calibration that will take place," he said.

The Saudi stock exchange, called the Tadawul TASI Index, is closed on Friday and Saturday and will reopen Sunday. The bourse has seen weakness over the last few months with the slide in oil prices and has lost around 20 percent since September 2014.

There has been speculation that Saudi Arabia could look to curb its public spending with the dramatic drop in the price of oil, but Maksad told CNBC that rumors that the country has $700 billion dollars in reserve funds means that there is some cushion for the new king to spend generously.