The end of Ali al-Naimi's more than two-decade tenure as Saudi Arabia's oil minister signals a new era for crude markets, analysts said on Saturday, and appeared to be a reaffirmation of Saudi policy to let oil set its own pricing.
On Saturday, Saudi Arabia issued a royal decree that replaced al-Naimi with Khalid al-Falih, chairman of Saudi Aramco, as part of a broad reshuffling of the cabinet. The move came as the world's largest oil producer continues to grapple with the fallout from the global bear market in crude oil.
Al-Naimi was the most watched figure in the oil world, and was often described as a "maestro" of the market. His utterances on production levels could swing prices and drive the direction of oil for months.
Last month, a high-stakes summit in Doha between OPEC and non-OPEC producers failed to produce an agreement to freeze output, in what was seen as the product of tensions between Saudi Arabia and Iran. The failure of Doha reinforced what many analysts have said for months: That the oil cartel was quickly losing its ability to set the agenda of world oil markets, and influence prices.
Al-Naimi battled to manage the price of oil throughout his time as minister. In his absence, the Saudis may allow market forces to play a greater role in setting the cost of crude, according to observers.
"What that means is you'll have much more market volatility. You'll have higher highs and lower lows if you don't manage" crude prices, Pira Energy Group founder and executive chairman Gary Ross told CNBC on Saturday.
Al-Naimi was a "stabilizing force," and markets could react negatively to his absence, said Ross, who has known al-Naimi for more than 20 years. Although savvy observers say the aging al-Naimi was ready to vacate his post, the implications of the shake up are still far reaching.
"The Saudi put is gone," Ross added.