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Saudis walk next to a portrait of Crown Prince Mohammed bin Salman at the Riyadh Season Boulevard in the Saudi capital.
Fayez Nureldine/Agence France-Presse/Getty Images
Saudi Arabia’s 84-year-old King Salman underwent surgery to remove his gallbladder on Thursday, stoking speculation that the end of his reign may be near, which would set the stage for the succession of Crown Prime Mohammed bin Salman.
The potential death or abdication of the elderly monarch has long been the subject of speculation. Meanwhile, the 34-year-old crown prince, known widely by his initials MBS, has been seen as the country’s de facto ruler for years.
The crown prince has faced bipartisan criticism in the U.S. Congress and international condemnation over Riyadh’s military intervention in Yemen and the killing of dissident journalist Jamal Khashoggi, but has retained the support of the Trump administration. The kingdom has denied any involvement by the crown prince in the death of Khashoggi, who was murdered by a team of Saudi agent’s in the country’s consulate in Istanbul last year.
Separately, Kuwait’s 91-year-old ruler, Sheikh Sabah al-Ahmad al-Jaber al-Sabah, traveled to the U.S. this week for treatment following complications from bladder surgery, The Wall Street Journal reported. Kuwait’s 83-year old crown prince, Sheikh Nawaf al-Ahmed al-Jaber al-Sabah, is seen in poor health also, the report said. Together, the two countries control around a fifth of global oil reserves, the newspaper noted.
A change of leadership for either major oil producer would be unlikely to have any immediate impact on oil policy in the region, said Helima Croft, global head of commodity strategy at RBC Capital Markets, in a Thursday note.
“We do not expect any significant change in oil policy in the event of a leadership transition and we think the current commitment to the OPEC agreement will endure major leadership changes,” she said.
OPEC and its allies, a group known as OPEC+, agreed earlier this month to trim production curbs from 9.7 million barrels a day to 7.7 million barrels a day beginning in August.
Brent crude BRN00, -0.57%, the global benchmark, was little changed on Friday but is on track for a July gain of around 5%. West Texas Intermediate crude CL.1, -0.41%, the U.S. benchmark, was also trading near unchanged Friday but was up around 4.6% for the month to date.
Croft observed that transitions in Saudi Arabia have often been accompanied by temporary increases in domestic spending.
“Recently, the leadership has cut spending and raised taxes in response to the oil price downturn while it has accelerated the Public Investment Fund’s deal activities,” she said. “A key question is whether there would be a significant shift in this strategy in the event of a succession scenario.”
