Delivering results for Vision 2030

The announcement of a new oil minister represents the end of an era in Riyadh

After seven decades in the oil industry, Saudi Arabia’s oil minister Ali Al Naimi has been succeeded by the chairman of Saudi Aramco, Khalid Al Falih. Fayez Nureldine / AFP Photo

After seven decades in the oil industry, Saudi Arabia’s oil minister Ali Al Naimi has been succeeded by the chairman of Saudi Aramco, Khalid Al Falih. The shift, announced by royal decree, marks the end of an era in the kingdom. Mr Al Naimi has presided over the country’s golden age of oil. But his departure also signifies something much more important: the beginning of a new chapter in the development of the kingdom’s economy, one in which oil is not expected to play such a pivotal role.

As analysts around the world have noted, Mr Al Naimi’s departure, along with the reshuffle of several other key ministries, is a sign that deputy crown prince Mohammed bin Salman is bringing more of the governing structure under his authority.

Having crafted an ambitious strategy to diversify the economy away from hydrocarbon profits as part of the Saudi Vision 2030 development plan, Prince Mohammed is demonstrating his commitment to implementing his policy. Already the 30-year-old prince has established himself as a pivotal figure by overseeing economic and oil policy as well as heading the defence ministry.

The question on everyone’s mind is how oil markets will react to the news of the Saudi shake-up when trading resumes this morning. Mr Al Naimi ran the ministry for two decades and is such an authority in the industry that he could move markets with only a few sentences. Under previous Saudi rulers, King Fahd and King Abdullah, Mr Al Naimi was given ample room to manoeuvre Saudi’s oil market share but in recent months the dynamic seems to be changing.

Ultimately, as Middle East stock markets echo with shares rising on the news of the change, the government reshuffle in Riyadh demonstrates the leadership’s readiness to implement Vision 2030. King Salman also appointed ministers for water, commerce, health, transport, social affairs, and pilgrimages. In the coming weeks and months, critical details about the implementation of Vision 2030 will also come to light.

International markets will be closely watching the announcements to see if the world’s largest oil producing country is able to quickly revolutionise its economy and end its hydrocarbon dependence. Riyadh is showing that it is serious about trying.