Saudi Arabia will split the vast energy, industry and mining portfolio that Al-Falih had run since 2016 into two separate ministries.
Monday 02, September 2019
With crude oil trading below Saudi Arabia’s break-even level, energy policy is a top priority for the world’s biggest crude exporter, reported Bloomberg.
Following the loss of most of his domestic portfolio, Energy Minister Khalid Al-Falih will now have more time to work on balancing the market.
The reshuffle of the massive energy ministry announced as part of a raft of royal decrees last week, sees Al-Falih keeping responsibility over energy policy and losing the industry and mining aspects of the role.
Al-Falih has been the face of Organisation of Petroleum Exporting Countries (OPEC) diplomacy over the past three years as the producer group has sought to counter the rising tide of US shale oil that flooded markets.
The ministry reshuffle will not change Saudi oil policy as the kingdom remains focused on curbing production to balance crude markets and prop up prices, says Edward Bell, Commodities Analyst at Emirates NBD.
Saudi Arabia has cut production to less than 10 million barrels a day as part of its agreement with OPEC to limit output. Al-Falih helped broker the deal that brought other producers like Russia into the effort to balance markets by curbing production. The Saudis are doing most of the heavy lifting to support the deal, pumping about 500,000 barrels a day less than they pledged.
The cut in production comes as the Kingdom is embarking on a plan to plough investment into new industries like manufacturing and mining to help reduce the government’s reliance on oil revenue.
According to the International Monetary Fund, Saudi Arabia needs to trade near $80 a barrel to balance its budget.
Spinning off the industry and mining portfolios brings the energy ministry back to the core functions it was responsible for under Al-Falih’s long-serving predecessor Ali Al-Naimi. It was only when Al-Falih replaced Naimi in 2016 that the role expanded to cover large swathes of the domestic economy.