Death of King Unlikely to Alter Saudi Oil Policy

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from The Wall Street Journal,

Kingdom Is Likely to Continue to Pump Crude in Face of Glut.

Saudi Arabia has charted a long-term course to drive down oil prices and maintain its major share of the global market—and a change of who is on the throne in Riyadh won’t likely alter this course, energy experts said.

Even after the death of King Abdullah, the kingdom is likely to continue to pump crude in the face of a global glut of crude, which has helped push prices down by more than 55% since last June.

Surrounded by unrest and uncertainty in the Middle East, Saudi Arabia is protecting itself by exploiting its big advantages—huge oil reserves and low-cost crude production, said Sarah Emerson, principal of ESAI Energy LLC in Boston.

“They need to make sure they have enough market share for not just tomorrow but 2040 and 2060 and beyond to ensure longevity,” Ms. Emerson said. The Saudis embarked on this new strategy in reaction to the U.S. oil boom, and it is a new status quo that won’t change under a new king, she said.

That doesn’t mean that in the short term, oil traders won’t be nervous about the ascension to the throne of Crown Prince Salman, or that oil markets won’t be volatile.

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