Crude Oil Prices and the New Saudi King

Last Friday, I appeared on CNBC's "Closing Bell" to discuss the new Saudi King Salman and his impact on crude oil prices.

The interview was set up on a flight back to Pittsburgh and took place via satellite feed almost as soon as I landed.

The interview primarily centered on what the Saudi change at the top would do to oil prices. But the broader implications of the change in leadership is where the significance actually lies.

You can watch it here:

As you might expect, there's more to this story than meets the eye…

A Tougher Time for U.S. Policymakers

First, initial concerns over political instability upon the death of 90-year-old King Abdullah were overblown from the outset.

The new king, Salman, had been Crown Prince since 2012 and Defense Minister since 2011. In truth, he has been calling the shots for over a year due to Abdullah's declining health.

Salman's first moves – appointing his half-brother and former head of intelligence Muqrin as heir and Prince Mohammed bin Nayef (the Interior Minister) as the new Crown Prince – will secure an orderly transition.

That's the good news.

At 79, Salman is rumored to have health problems that may include Parkinson's and dementia, although both have been denied. He's had a stroke and is partially paralyzed in his left arm. Muqrin is younger at 69. They are the last two sons of the country's founder, Ibn Saud.

At 55, Nayef represents the transition to the next generation of house leadership, where there are a number of other challengers. That's the juncture at which some political infighting may occur.

Second, and more of a problem for Washington, are Salman's views on a range of issues.

He's more traditional than Abdullah and has voiced misgivings over social and political reforms, including the status of women and the extension of democracy. The new king regards democracy as a destabilizing element.

He once said that providing greater political accountability would only allow the tribal heads to increase their power at the expense of the central government, and foment unrest.

Salman is also a concerted opponent of Shiite Iran and will take a harder line in the region against what he considers a direct threat to Saudi security. That may ultimately prove to be a big problem for American overtures to Tehran.

In fact, security is a strong theme that permeates the careers of all the figures in the new line of succession. Muqrin is the former director of Al Mukhabarat Al A'amah, Saudi Arabia's central intelligence agency, while Nayef, as Interior Minister, has been leading the fight against Al-Qaeda.

While there is no sign of a rift forming between primary Saudi and American interests in the region, U.S. policymakers will have a tougher time with the leadership in Riyadh than they've had in some time.

Here's why…

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