Saudi Arabia’s veteran oil minister Ali al-Naimi has been removed by King Salman as part of a broad government overhaul.
Ali al-Naimi has been replaced after more than 20 years in the role by former health minister Khaled al-Falih.
Saudi Arabia – the world’s largest crude exporter – unveiled major economic reforms in April, aimed at ending the country’s dependence on oil.
In 2015, about 70% of Saudi Arabia’s revenues came from oil, but it has been hit hard by falling prices.
The Saudi government shake-up, announced in a royal decree, sees a number of ministries merged and others, such as the ministry of electricity and water, scrapped altogether.
A public body for entertainment is being created, and another for culture.
King Salman’s son Prince Mohammad directs Saudi Arabia’s economic policy, and Ali al-Naimi’s removal is an indication that he wants tighter control over the commodity.
Khaled al-Falih has spent more than 30 years working at state oil giant Aramco, most recently serving as chairman.
He will take charge of a new department managing energy, industry and mineral resources.
Years of oil profits have allowed the Saudi government to offer generous benefits and subsidies to its citizens.
However, with another huge budget deficit forecast in 2016, last month saw the approval of wide reforms including plans to create the world’s biggest sovereign wealth fund and widen the participation of women in the workforce.
Many of the changes announced by King Salman in this overhaul focus on areas where reforms have been promised.
Oil prices will recover to $70 a barrel by 2020, oil producers’ group OPEC has said.
Prices have fallen from more than $110 a barrel in the summer of 2014 to less than $37 a barrel now due to oversupply and slowing demand.
However, OPEC said oil prices would begin to rise next year and, longer term, would rise due to higher exploration costs.
It expects the market share of OPEC producers to shrink by 2020 as rivals prove more resilient than expected.
OPEC currently accounts for about 30% of the world’s oil production, down from 50% in the 1970s.
Part of the reason for this decline is the emergence of vast quantities of shale oil produced in the US. This has also been factor in pushing down the price of oil to 11-year lows.
Photo Getty Images
In its World Oil Outlook report, OPEC said it expected supply growth from US shale to slow dramatically in 2016, as producers struggled to cope with such a low prices.
OPEC’s strategy this year has been to allow prices to fall by maintaining production in the hope that, eventually, US shale producers will be forced out of business.
Another factor in low prices, OPEC said, was weaker economic growth, particularly in developing economies. It highlighted China, where the “economy seems to be maturing and growth is decelerating faster than previously expected”.
The group’s report also highlighted the “huge reductions” in spending on exploration and production by the industry as a whole due to low oil prices.
These cutbacks will ultimately see supply fall, it said, putting upward pressure on prices.
According to OPEC, another longer-term factor pushing prices up was higher exploration costs, as companies are forced to look harder for oil as traditional supply sources dwindle. Deep water drilling, for example, is considerably more expensive than drilling onshore.
Finally, OPEC said population and economic growth would see demand for energy rise by almost a half by 2040, increasing demand for oil.
OPEC was founded in 1960 by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
These countries have since been joined by Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), Nigeria (1971), Ecuador (1973), Gabon (1975) and Angola (2007).
Nigerian people and trade unionists have condemned the government for withdrawing a fuel price subsidy which has led petrol prices to more than double in many areas.
Nigerians are angry at the announcement, fearing the price of many other goods will also rise.
The main trade unions have called people to prepare for a strike.
Nigeria is Africa’s biggest oil producer, but imports refined petrol.
Years of mismanagement and corruption mean it does not have the capacity to refine oil, turning it into petrol and other fuels.
Analysts say many Nigerians regard cheap fuel as the only benefit they get from the nation’s oil wealth.
Several previous governments have tried to remove the subsidy but have backed down in the face of widespread public protests and reduced it instead.
The IMF has long urged Nigeria’s government to remove the subsidy, which costs a reported $8 billion a year.
Early in the morning, many petrol stations in Nigerian capital Abuja were closed as the owners were not sure what price they should charge, but they have since opened.
Prices have increased from 65 naira ($0.40) per liter to at least 140 naira in filling stations and from 100 naira to at least 200 on the black market, where many Nigerians buy their fuel.
There are reports that petrol prices have tripled in some remote areas, while commuters have complained that motorcycle and minibus taxi fares have already doubled or tripled.
The government finance team led by respected pair central bank governor Lamido Sanusi and Finance Minister Ngozi Okonjo-Iweala have long argued that removing the subsidy would free up money to invest in other sectors and relieve poverty.
In a statement, it urged people not to panic-buy or hoard fuel.
“Consumers are assured of adequate supply of quality products at prices that are competitive and non-exploitative,” the statement said.
The government recently released a list of the biggest beneficiaries of the subsidy, who include some of Nigeria’s richest people – the owners of fuel-importing firms.
Nigerians are heavy users of fuel, not just for cars but to power generators that many households and businesses use to cope with the country's erratic electricity supply
Nigeria’s two main labor organizations, the Trades Union Congress and the Nigerian Labor Congress, issued a joint statement condemning the move.
“We alert the populace to begin immediate mobilization towards the D-Day for the commencement of strikes, street demonstrations and mass protests across the country,” the statement said.
“This promises to be a long-drawn battle; we know it is beginning, but we do not know its end or when it will end.
“We are confident the Nigerian people will triumph.”
Labor activist John Odah told the BBC’s Network Africa programme that, judging from past experience, he doubted that the government would use the money saved by removing the subsidy to help ordinary people.
John Odah said that the subsidy should have been retained until Nigeria’s refineries had been brought up to scratch.
“As an oil-producing country, we ought not to be importing fuel in the first place,” he said.
John Odah also pointed out that Nigeria does not have many commuter railways, so people have little choice but to use motorcycle and minibus taxis, whose prices are closely linked to the price of petrol.
Nigeria is Africa’s biggest oil producer but most of the available 2 million barrels per day are exported in an unrefined state.
The country lacks refineries and infrastructure so has to import refined products such as petrol, which is expensive.
However, with the price of fuel much cheaper in Nigeria than in neighboring countries, the subsidy led to widespread smuggling.
Nigerians are heavy users of fuel, not just for cars but to power generators that many households and businesses use to cope with the country’s erratic electricity supply.
The measures just announced could add to the difficulties faced by Nigerian President Goodluck Jonathan, who declared a state of emergency on Saturday in areas hit by Islamist violence.
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