Crude is sliding on Monday, down more than 2.5% after opening overnight slightly higher.
Near 11:30 a.m. ET on Monday, West Texas Intermediate crude oil – the US benchmark – was down more than 2.5% to trade as low as $43.50 a barrel.
The big news in oil markets Monday is news out over the weekend that Saudi Arabia’s longtime oil minister Ali al-Niami would be replaced by Khaled al-Falih, the chairman of state-run oil company Saudi Aramco.
In a note to clients following this news, RBC Capital Markets’ Helima Croft wrote (emphasis mine):
The sacking of Saudi Arabia’s veteran oil minister Ali al-Naimi can be seen as part of deputy crown prince Mohammad bin Salman’s (MBS) efforts to consolidate power. Yet, it is unlikely to lead to any immediate shifts in the country’s market share strategy or presage any new enthusiasm for OPEC cooperation, in our view. […]
While al-Falih certainly represents a very capable set of hands to steer the ministry, which will now oversee everything related to energy, industry, and minerals, he is unlikely to enjoy the same type of authority to set policy that Naimi did during King Abdullah’s reign. MBS, who is reportedly referred to as “Mr. Everything” by Pentagon officials, remains the ultimate decision maker on oil policy. MBS has made it clear in recent interviews that he does not see any immediate urgency for higher oil prices and is instead focused on ending his country’s dependence on hydrocarbons as part of a sweeping reform that includes the partial privatization of Aramco… Perhaps the imperative for higher prices will return if the Saudi public starts to push back against the proposed austerity measures, but for now, MBS seems ready to sit back and let market forces or political instability in other producer countries produce an eventual recovery.