CNBC's Melissa Francis reported today on "speculation" that the Saudi Oil Minister, Ali Al-Nami, might be replaced when the Saudi monarchy shakes up its cabinet in February. Al-Nami has held the post for 12 years. Also of note on oil--the New York Times reported over the weekend that the Saudis are committed to keeping oil prices at $50 a barrel. This, some say, could be an effort to squeeze Iran's economy--which has favored rising oil prices along with Venezuela. Oil revenues are crucial to the economies of both those countries.
So what would Al-Nami's departure mean for the Saudi's and the price of oil? Jan Stuart is an oil economist with UBS and Roger Diwan is managing director with PFC Energy. Both appeared on "Morning Call."
Diwan says that the Saudis are really doing what they have been doing all along--and that they aren't really changing policy with their interest in a $50-60 a barrel price range. He says they've been working on that for the last two years. And why? Diwan says it's in the Saudi's interest to keep prices at a certain level--in order to avoid a negative impact on the global economy.
Stuart agrees--and that the Saudis are worried a step price change would have a negative effect on the world's economies. As to Al-Nami himself--Stuart says that he's done a very good job of not mixing oil and politics--and making his decisions based on more pragmatic criteria. Stuart says that if the 67 year old Al-Nami is replaced--there may be a few days or even a week of concern--but that would quickly go away. Diwan agreed--saying Al-Nami is really conducting the policy of the Saudis--and not his own. His successor would do the same.
As to who would replace Al-Nami, Melissa Francis says that the current CEO of Saudi Aramco, Abdallah Jum'ah could be the man. Al-Nami was CEO of Aramco before becoming Saudi's oil minister. Aramco is Saudi Arabia's national oil company.
FYI-Saudi Arabia controls 1/4 of the world's oil reserves. Saudi officials, according to the New York Times, say they do NOT set the price of oil on international commodity markets. They say it's hedge funds and other speculative traders that have created instability in the oil market. The Times also reports that the Saudis led OPEC to cut their output last fall, to prevent prices from falling too steeply.