As tensions continue to run high between Saudi Arabia and Iran, the Saudi’s are busy making strategic moves to consolidate power with its government. Should things between the Saudis and Tehran escalate into some type of a violent confrontation, the Saudis want to be sure they have adequate control over the oil industry and OPEC.
Based on his end goals, Deputy Crown Prince Mohammed bin Salman of the Royal family has announced by decree that Ali Al-Naimi is being replaced as the country’s oil minister by Khalid Al-Falih, the chairman of state-owned oil company Aramco. The move was necessitated by the perception that al-Naimi had lost much of his power-base in OPEC. This became apparent when he was unable to secure enough votes to support Saudi Arabia’s desire to freeze oil prices at current levels.
This announcement is important on two levels. First, Prince Salman is making it clear that the Saudis need to remain as the de-facto leader of OPEC in order to control oil prices and avert aggression from Iran. Secondly, it offers further evidence that the Prince is in fact taking over as the country’s leader in many of the most important domestic areas. The hiring of Al-Falih will give him more control over what happens to oil prices than he was likely to have with Al-Naimi still sitting as his oil minister.
Having control over OPEC has become increasingly more important for the Saudis as the Iranians have begun pushing hard to increase oil production levels. After years of living under restrictive economic sanctions set forth by the US, Iran is desperately trying to find ways to increase production and bring in much needed revenues. The assumption is those revenue would be used to support the country’ nuclear weapons program and beef up its military in anticipation of confrontation from unfriendly nations.