Abu Dhabi: Energy experts have said that there will not be any significant modifications to the Saudi policy of keeping oil production at current levels after new king took over on Friday.
“The death of King Abdullah caused an immediate spike in oil prices as there is a significant amount of volatility and speculation in the oil market at the moment. But, this is expected to be a short term phenomenon as there is not expected to be a radical shift in policy,” said Justin Dargin, a global energy expert at the University of Oxford.
He said Saudi Arabia prides itself on a very “go slow” or conservative policy shift framework. “While Saudi kings do have the final say in the policies of the kingdom, Saudi policy is not created as it was during the days of its founder, Ibn Saud who would oversee the day to day management of the kingdom. Saudi policy is now created more on a consensus model between the various stakeholders in the kingdom.”
Daniel Ang, an investment analyst from Singapore-based Phillip Futures, said the prices spiked due to an uncertain situation. “This is temporary. It would wear off once the market is clear on the new king’s view with respect to the current oil situation.”
He said compared to earlier in the week, there was higher levels of volatility on Friday. “However, this increased volatility was not only the result of the Saudi king’s passing. The European Central Bank announcement of the quantitative easing programme did play a major role in this increase as well.”
Oil prices have been falling since June due to oversupply and weak demand. The Organisation of the Petroleum Exporting Countries, which met in November last year, maintained its output levels.