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Saudi shakeup is 'terribly detrimental' to oil prices, warns Dennis Gartman

The political shakeup in Saudi Arabia may change the direction of oil prices, but not in the way most investors think.

Dennis Gartman, who's often referred to as the commodities king, sees a monumental shift happening in oil markets — one that could bring West Texas Intermediate crude oil back to historically low levels.

"You may get another dollar or 2 upfront in the front months just because of the confusion. But in the long run, this is terribly detrimental to crude oil prices," the editor of the Gartman Letter said Tuesday on CNBC's "Futures Now."

On Saturday, Saudi Arabia launched a corruption crackdown allegedly implicating dozens of princes and ministers, including billionaire investor Prince Alwaleed bin Talal.

In addition, with tensions rising between Saudi Arabia and Iran, especially over Yemen, there's growing concerns that a war will erupt in the region and disrupt oil.

"Over the weekend, it had barely moved, and I thought that was fascinating that crude oil didn't move much at all," Gartman said. "If this had occurred five years ago, crude oil would have been 5, 6, 7, 8, $9 higher in the course of two days."

According to the OPEC website, Saudi Arabia has about 22 percent of the world's proven petroleum reserves. The country is also world's top exporter of the fossil fuel.

Instead of rising on the disorder, crude broke a three-day win streak on Tuesday. It fell a quarter percent to close at $57.20. Since the Saudi Arabia news broke, crude is up just 2.4 percent.

Gartman argues that as countries become less reliant on fossil fuels and technology improves in the United States to get hard-to-reach oil, the Saudis' grip on the oil industry is slipping.

"Is Saudi Arabia losing its position of authority? Absolutely," Gartman said. "The game has changed dramatically."

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