Saudi Arabia will probably keep producing crude at near-record levels under its newly appointed oil minister, Khalid Al-Falih, as the world’s largest exporter sticks with its policy of defending market share against higher-cost shale.
Al-Falih, also chairman of the state producer Saudi Arabian Oil Co., said on his first day in office on Sunday that he will maintain the kingdom’s oil policy. His predecessor, Ali al-Naimi, had been leading a policy prioritizing sales over prices since 2014, driving some higher-cost producers, including U.S. shale drillers, off the market. In so doing, Saudi Arabia boosted output, adding to an oil glut. The strategy is showing signs of succeeding this year, with prices rising more than 60 percent since falling to a 12-year low in January.
Saudi Arabia appointed Al-Falih Saturday to head the newly expanded Ministry of Energy, Industry and Mineral Resources. He replaced al-Naimi, a 20-year veteran in the post. Al-Falih takes over the ministry responsible for most of the nation’s income as the biggest producer and de facto leader of OPEC embarks on an economic overhaul designed to make it less reliant on petroleum.
Brent crude fell to less than half of its annual average of more than $100 a barrel from 2011 through 2014, adding urgency to the push for changes in Saudi Arabia and other energy exporters in the region. Brent crude closed at $45.37 a barrel on Friday in London, a partial recovery from its intraday low of $27.10 a barrel on Jan. 20.