$52.81 last, down $1.31.
From ZeroHedge:
Saudi King Abdullah Hospitalization Sends Stocks Tumbling But It's Oil That Is Suddenly Paying Attention
Earlier today, Saudi Arabia's stock market fell sharply with the Tadawul All Share Index plunging following a Saudi state TV report that King Abdullah had been admitted to hospital for tests. As shown in the chart report, the index tumbled as much as 6% in the minutes after the Saudi Press Agency report which quoted a brief royal court statement.
But while the ill king of the King, aged 90, is hardly news to the discounting stock market, a few more nuanced interpertation of not just what happens if and when the King passes away but what Saudi succession looks like, is much more relevant for oil - especially now that Saudi Arabia has unilaterally decided to tear apart OPEC in its push to put US shale producers out of business.
As Emad Mostaque of EC Strat, accurately observes:
Oil prices are now at levels that cause real concern on the streets of Saudi Arabia, with the prospect of succession the icing on top that has caused retail investors to take the market down another leg.
This policy may not make it through a succession period, where public support and good will is essential, particularly as it has nearly been 20 years since the last change.
The new regent could decide to keep existing policy, change it completely or anything he decides. Similarly he has free reign to realign Saudi Arabia’s foreign policy as he wishes, which is a discussion for another time and place, but could have significant regional impacts.
The full note from the source can be found below.The author of the Ecstrat note, Emad Mostaque, basically called the rise of ISIS, which we noted in a couple posts last summer:
Summary: King could change, new King can do (almost) anything he wants, including changing oil policy
The Saudi market collapsed 6.5% today on Saudi Press Agency reports that King Abdullah was admitted to hospital for medical tests.
Ordinarily this shouldn’t be a big deal and is nothing new, with King Abdullah having had back surgery in 2012 and spent an extended period in convalescence in Morocco in the last year. However, having led the Kingdom for almost 19 years (as of Friday) and at the official age of 90 years old, this report raises the question of eventual succession once more.
Unlike Oman, where Sultan Qaboos has been unwell in Germany and his heir unknown, we know that King Abdullah’s heir will be Prince Salman bin Abdulaziz al Saud (79), who succeeded Prince Nayef as Crown Prince in 2012 having been Minister of Defence and Governor of Riyadh previously. Next in line is Prince Muqrin (69), the youngest of that generation of Princes, meaning a likely generational jump thereafter.
While any process of succession should be smooth with the next two leaders defined (and some strong probabilities as to who follows after), there is significant uncertainty as to what path Saudi Arabia may take going forward....MORE
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I'm leaning toward some sort of geopolitical quid pro quo with the U.S. but because they don't invite me to the meetings I can't tell you the quid or the quo of it. Back on Oct. 2 we had the simple observation "The folks most hurt by this drop in price are Putin, ISIS and the companies producing from shale."
