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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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Will Saudi Succession Impact Country’s Energy Exports?

Will Saudi Succession Impact Country’s Energy Exports?

The death apparently in New York City on 22 October of 80 year-old Crown Prince Sultan Bin Abdul-Aziz Al Saud, throws a spotlight on the question of who will succeed ailing 87-year-old King Abdullah, currently recovering from a third operation to resolve back problems in less than a year. Insiders are betting that Sultan, who reportedly suffered from Alzheimer’s disease, will be succeeded by his half brother, Prince Nayef Bin Abdul-Aziz, a sprightly 78 year-old.

Sultan’s death highlights the murkiness surrounding issues of the Saudi royal family, as a government statement noted simply that he had died “abroad.” Sultan had served as both Saudi Defense Minister and Deputy Prime Minister and was a half brother to King Abdullah.

Both were sons of King Abdul-Aziz Al-Saud, who founded Saudi Arabia.

According to Saudi Arabia’s succession tradition, the next heir to the throne must be the oldest living son of Abdul-Aziz, whom the king names his successor. But it is possible that King Abdullah now seek the approval of the Allegiance Council, a 33-member body composed of his brothers and cousins, which King Abdullah created as part of his reforms, giving it a mandate to be involved in choosing the heir.

If Prince Nayef, reportedly suffering from diabetes and osteoporosis, does in fact become Crown Prince, the issue becomes what policies he might pursue. Prince Nayef’s 34 year tenure as head of the Saudi Ministry of the Interior gave him effective control of the country’s internal security, and he used that power to uproot the country’s Al Qaida cells, arresting hundreds in the process. 

Prince Nayef has acquired a reputation as a hardliner in his foreign affairs attitudes, repeatedly demanding the country take a strong position against Iran’s rising regional influence. Earlier this year Prince Nayef accused Iran of encouraging protests among Saudi Arabia's minority Shiites, which his security forces handily repressed. In a further demonstration of his no-nonsense attitude towards the political forces unleashed throughout the region by the “Arab Spring,” in March he was involved in the Saudi government’s decision to dispatch military forces into neighboring Bahrain to assist in repressing pro-reform demonstrations by the country’s majority Shiites against its Sunni monarchy.

So, if in fact Prince Nayef does soon become the Saudi king he will likely face several political issues in need of swift resolution as the country’s prosperity and oil exports are to be maintained.

The first is that the country cannot simply bury its head in the sand and ignore the sweeping regional changes. For oil exports, the most pressing issue is to reach an accommodation with Iran, regardless of the purported recent Iranian assassination attempt against the Saudi ambassador to the U.S. If Saudi and Iranian tension did in fact rise to the level of armed action then it is likely that the Iranians would carry through their threat to close the Straits of Hormuz to oil tankers, where 40 percent of the world’s oil tankers sail, then oil prices would rise dramatically through the stratosphere. Saudi Prince Turki al-Faisal, Prince Nayef’s nephew, the former head of Saudi intelligence services and previously Riyadh’s ambassador to Washington said, “The burden of proof is overwhelming, and clearly shows official Iranian responsibility for this. Somebody in Iran will have to pay the price.”

The second issue is one of internal security. Saudi Arabia’s minority Shias make up around 10 percent of Saudi Arabia’s 27 million inhabitants and Riyadh has been suspicious of their loyalties ever since the 1979 revolution that deposed Iran’s monarchy led by Shah Reza Pavlevi and replaced it with a cleric-led government. Prince Nayef has already indicated a willingness to use force in this context.

Finally there is the growing age disparity between Saudi Arabia’s populace, 70 percent of whom are under the age of 30 with a median age of 19, while in contrast, the average age of Saudi cabinet ministers is 65. An estimated 40 percent of Saudi youths have no jobs and nearly half of those employed receive less than $830 a month, in contrast to the fabled riches of the country’s extended royal family.

But one area where Saudi youth are light-years ahead of their gerontocratic leadership is in their savvy awareness of both the Internet and social networking media. Earlier this year several online petitions circulated calling for Saudi Arabia to become a constitutional monarchy and despite Saudi Arabia having an Internet blocking capability second only to “the Great Firewall of China,” Saudi authorities are struggling to keep their young from accessing more suspect websites. Furthermore, it can hardly have escaped Riyadh’s attention that the Arab Spring dynamism has been provided by the plugged-in young. Masses of bright unemployed youth with few prospects for anything better than McJobs has brought demonstrations from Wall St. to Tripoli.

The final issue, which threatens U.S. oil imports in particular is Washington’s attempts at the UN to quash Palestinian bids for international recognition.  The Saudi government has indicated its objections to Washington’s obstructionist stance on the issue, with Prince bin Turki saying bluntly in a recent essay in the New York Times that an American veto of Palestinian U.N. membership would end the ''special relationship'' between the two countries, and make the US ''toxic'' in the Arab world.

As Al-Saud had dozens of sons, many of whom are still living even if advanced in age, the issue of succession in Saudi Arabia will likely to trundle on as before, even as the world around it encroaches on its isolationist self-proclaimed stability. Not that the cash will run out anytime soon, Saudi Arabia currently has $440 billion in foreign reserves. But the question arises as how receptive the Saudi monarchy is to the winds of profound change blowing through the region and if Prince Nayef does in fact eventually become king, his track record indicates that he is less of a reformer than an “authoritarian” figure, with all the implications not only for Saudi Arabia but its oil clients.

By. John C.K. Daly of Oilprice.com

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  • Anonymous on October 27 2011 said:
    There seems to be some misunderstanding here. As I will soon point out in a brilliant talk in Singapore, NOTHING has changed with oil in Saudi Arabia. In the mid l970s they said that they would produce about 10 million barrels of oil per day, and they have mostly been doing this for about 35 years. How much they export however is determined by local consumption, and so exports should slowly decrease.Who rules Saudi Arabia, and what their rulers do, is THEIR business. It is not the business of commentators from Wall Street or Beverly Hills. The Saudi government does not consist of fools or hypocrites like the ignorant director of NATO, Fogh Rasmussen, who fought the good fight to help civilians in Libya, although the hotel I was in once in Copenhagen was surrounded by sellers of narcotics.

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