Saudi Arabia’s powerful King Abdullah has died at the age of 90. News of his death caused a 2.5 percent increase in crude oil.
King Abdullah was well-known for fighting against al-Qaida and seeking to modernize the ultraconservative Muslim kingdom, including supporting better opportunities for women.
Over the past year, oil prices have fallen by half, dropping 3 percent yesterday alone until news of the Saudi King’s death was announced.
Saudi Arabia is the second largest world producer of energy – the US claimed first place earlier this year. Being the second-largest producer brings with it a large influence over world energy prices. The country continues to produce large amounts of oil even as prices sink, which in turn, causes prices to fall even more.
Many analysts believe that King Abdullah’s half-brother and successor, Price Salman, will carry on with the same policies as his brother. Speculation has caused the market to react anyway.
Saudi Arabia is forecasting a deficit of around $39 billion due to oil; its largest ever. About 80 percent of the country’s revenue and more than 40 percent of their GDP come from oil. This may become a tumultuous time for those who rely on their government’s subsidies in healthcare, jobs and education.
US President Barack Obama offered condolences to the people of Saudi Arabia: “As a leader, he was always candid and had the courage of his convictions. One of those convictions was his steadfast and passionate belief in the importance of the U.S.-Saudi relationship as a force for stability and security in the Middle East and beyond.”