NEW YORK — The oil market reacted swiftly to the death of the king of Saudi Arabia, the world’s largest exporter of petroleum.
Crude oil was 2% higher immediately after the news broke, trading just above $47 a barrel.
King Abdullah bin Abdulaziz al Saud’s health had been deteriorating in recent weeks, according to the state-run Saudi Press Agency. He was king of Saudi Arabia since 2005 and celebrated his 90th birthday in August.
His half-brother Prince Salman bin Abdulaziz al Saud was expected to assume the throne.
Saudi Arabia has 16% of the world’s oil reserves, and in 2013 was the world’s largest exporter of total petroleum liquids, according to the U.S. Energy Information Administration. The country is widely seen as the leader of OPEC.
Oil has fallen over 50% since the summer. Crude oil traded over $100 as recently as July. It now trades below $50. OPEC’s decision, led by Saudi Arabia, on Thanksgiving Day to not cut production accelerated oil’s plunge.
Saudi officials have repeatedly said the nation will not cut oil production. It’s unlikely that the new king will alter that stance.
Last week Saudi Prince Alwaleed said oil is unlikely to return to $100 again.
“I don’t anticipate the Kingdom to make any dramatic changes in its oil policy in the short term,” said Fahad Nazer, a former political analyst at the Embassy of Saudi Arabia in Washington, DC.