Why was the Saudi oil minister sacked? | Saudi Arabia

He was the de facto leader of OPEC and the most respected oil tanker in Saudi Arabia and on the world stage. So respected that when Crown Prince Mohammed bin Salman needed to preserve his credibility after the murder of journalist Jamal Khashoggi, energy minister Khalid al-Falih turned to him.

But by surprise he was ousted and replaced by Prince Abdulaziz bin Salman, a half-brother of MBS.

This is the first time that a Saudi family member in power has been appointed to this post. Technocrats like al-Falih have always been the choice of the nation to lead the oil ministry.

Al-Falih has also been relieved of his duties as chairman of the national oil giant Aramco.

Saudi Arabia holds 13% of the world oil market. During Al-Falih's tenure, he struggled to raise the price of oil to $ 80.

This award would give Mohammed bin Salman the financial strength to transform the economy away from dependence on oil. It would also allow him to balance his budget and not exhaust the foreign exchange reserves on imports.

Oil is crucial for Saudi Arabia. It accounts for 40% of its economy, 70% of public revenue and nearly 80% of export earnings.

According to Reuters, Saudi Arabian revenues from oil exports rose from more than $ 800 million a day in April 2014 to less than $ 300 million a day in February 2016, as a result of the shale oil boom in the United States. United States. In June of this year, he earned $ 400 million a day.

Saudi Arabia has done everything in its toolbox to raise prices. Al-Falih has sought the help of Russia and other non-OPEC countries to reduce its production. Saudi Arabia has brought its own production to its lowest level in five years – to no avail.

It also needs high oil prices to meet the ambitious $ 2,000 billion IPO valuation of Saudi Aramco early next year.

For now, analysts estimate that the world's most profitable company is worth between $ 1 trillion and $ 1.5 trillion. But MBS wants a higher valuation and as such, al-Falih has also failed.

"Saudi Arabia has ambitious investment plans, the 2030 vision and other areas, so I certainly think of the slow progress, as the Saudis would probably think, in achieving a more balanced market and the price increase that they would expect to be a big part of what drove this change, " Richard Mallinson, Senior Analyst and Co-Founder of Energy Aspects, tells Count the cost.

According to Mallinson, Prince Abdulaziz is "very deeply involved in the (oil) industry" and is perceived "as a safe pair of hands and an experienced person in the oil markets".

"So, I think that the fact that he's a prince and the fact that he's the half-brother of the crown prince is not the relevant factor, it's much more than just a man." He knows the wallet and that he is perceived as not wanting to make any waves in politics, "said Mallison.

"I do not think we would see a radically different policy, I think we might see a different communication style perhaps, maybe a return to an approach we had seen in the past in Saudi Arabia where there was fewer discussions, fewer comments. " in the press. The message that the kingdom wanted to communicate to the oil markets was less important. "

The economic cost of adapting to a warming planet

Earlier this year, Californian utilities Pacific Gas and Electric filed for bankruptcy protection while the costs of wildfires increased dramatically.

This was probably one of the most obvious cases of climate destruction by a company that had not done enough to prepare for global warming.

PG & E had to deal with a liability of about $ 30 billion because of its role in the fires of 2017 and 2018.

Federal Judge William Alsup attributed the cause of some of the fires to the negligence of the company. The judge also said the utility paid $ 4.5 billion in dividends to shareholders over the last five years without proper security measures.

And the German car industry is facing the threat of losing its crown as the first production center. A series of missteps – ranging from diesel fraud scandals to lack of preparation for the end of the combustion engine – has left the road open to the Uber, Tesla and Chinese electrical brands. An industry that employs more than 800,000 people is facing a decisive moment.

Both cases raise many questions: Do companies do enough to prepare for climate change or do leaders have their heads in the sand?

Our economic editor Abid Ali speaks to Feike Sijbesma, Director of the Dutch Life Sciences Society, Royal DSM, on adaptation to climate change and why it is important for business – despite the lack of political will on the part of US President Donald Trump, who withdrew from the Paris agreement on climate change.

German builders face climate change and other challenges

BMW in Germany was one of the first players in the production of electric cars. It currently ranks fourth behind Tesla and two Chinese companies in terms of sales.

Dominic Kane, of the Al Jazeera Group, spoke with Pieter Nota, a member of BMW's board of directors, at the Frankfurt Motor Show, about the production of BMW's electric cars. and other challenges facing the industry.

Source: Al Jazeera News