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The energy ministry reshuffle Saudi Arabia announced earlier this week will have no impact on Saudi-Russian relations in that area, Russian Energy Minister Alexander Novak told media as he announced a pending meeting with his Saudi counterpart Khalid al-Falih.
Al-Falih, who until this week led the giant ministry of energy, industry, and mining, has been relieved of his industry and mining responsibilities as well as of his chairmanship at Aramco. Now, Al-Falih will be in charge specifically of Saudi Arabia’s oil policies.
“We will continue our international cooperation with our colleagues, with my friend Mr. Falih,” Novak said.
Bloomberg noted that the reshuffle comes amid Saudi Arabia’s continued efforts to prop up oil prices as they continue to trade substantially below its breakeven price, which calculations have pegged at above US$80 a barrel, despite the Kingdom having some of the lowest production costs.
Meanwhile, Al-Falih announced his removal as chairman of Aramco himself on Twitter, congratulating his successor, Yasser Bin Osman Al-Rumayan, on the new position. Al-Rumayan is currently the head of the Saudi Public Investment Fund, the sovereign wealth fund that will be the recipient of any incoming funds from the long-awaited Aramco IPO.
Commenting on the reshuffle, The Financial Times’ David Sheppard said the pressure from Riyadh on Al-Falih will now only increase. As he no longer has to juggle any other policies or Aramco responsibilities, it will be his singular task to make higher oil prices happen.
What this means most immediately is that the Kingdom, according to Sheppard, could ask for deeper production cuts at the next OPEC meeting. That’s despite the fact that it has been cutting more deeply than it has to under the OPEC+ agreement and failing to push prices higher. The question whether Russia would be willing to accept even deeper cuts remains open despite the demonstration of warm mutual feelings between Novak and Al-Falih.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.