He has been replaced by Khaled al-Falih, who heads Saudi Aramco
May 12, 2016: After announcing reforms to overhaul the economy in April, Mohammed bin Salman, the deputy Crown Prince of Saudi Arabia announced a government shake-up. The Prince announced the removal of veteran oil minister Ali al-Naimi. He has been removed after 20 years in the job and replaced by Khaled al-Falih, who heads the state-owned oil company Saudi Aramco.
At one time, al-Naimi held three key positions simultaneously — minister of petroleum, chairman of Saudi Aramco and chairman of Saudi’s supreme petroleum council. He was the de facto leader of OPEC and called the shots. However, his influence on OPEC gradually started diminishing.
The announcement of the change, which came as a surprise, followed a string of reforms aimed at liberalising the economy and creating jobs.
A half-a-dozen other ministries and commissions were reformulated, eliminated or saw new heads appointed in an effort to improve government responsiveness and efficiency. The changes also included the establishment of new commissions for culture and entertainment, a move which could appeal to younger Saudis. The Ministry of Petroleum and Mineral Resources was renamed the Ministry of Energy, Industry and Natural Resources — to indicate the country’s commitment to diversify away from oil.
Most energy experts did not see al-Naimi’s departure as a sign that oil policy would change soon, especially with prices gradually rising and Saudi leaders refusing to endorse production limits unless Iran comes on board.
Some energy experts view this move as a signal to international oil markets that the Prince is going ahead with plans to transform Saudi Aramco into an energy conglomerate that could invest in projects with less interference from the royal family.
John Hall, chairman, Alfa Energy, says, “The dismissal of al-Naimi is a shock to the market at large and will cause uncertainty and concern. But whether or not the new minister takes a new direction, countries like Venezuela and Nigeria are unlikely to see oil prices touch $100 again.”