Saudi Arabia's stable energy policy

Top oil exporter Saudi Arabia's policy of being a price moderator in OPEC and a staunch US ally has been stable for decades and is not expected to change in the event of a leadership change.

A rumour about the health of King Abdullah, who is around 87, drove oil prices higher last week, but the Saudi foreign minister said he was alive and in "excellent shape".

Analysts said the oil price rise was a matter of "knee-jerk buying" and markets were generally nervous about uncertainty in the oil-producing Middle East as a result of events in Egypt.

The king has ultimate power, but also takes advice from Saudi Oil Minister Ali al-Naimi, 75, who has been in office since 1995.

The kingdom has the capacity to produce 12.5 million bpd -- equating to more than half of the roughly 19 million barrels of refined products the world's biggest oil consumer the United States uses every day.

Its close ties with the United States have been based in part on its moderate price aspirations.

Keen to avoid destroying demand for the commodity on which its economy depends, Saudi Arabia has said it favours a price of roughly USD 70- USD 80 a barrel and its high level of spare capacity allows it to add extra oil to the market if it sees a shortage.

"Saudi Arabia will always play a balanced role in supplying global demand," said a Saudi industry official.

King Abdullah, who has ruled the kingdom since 2005, has displayed a keen understanding of the mutual dependency between producers and consumers, industry insiders say.

Riyadh has on many occasions ruled out using oil as a weapon against the West in the Arab-Israeli conflict and has often vowed to fill any supply gaps created by political upheaval or natural disasters.

In an effort to jump start the economy, the reform-minded king has allowed foreign partners a role in gas exploration, development of renewables and the oil downstream, but oil exploration and development remains a strictly Saudi preserve.

The kingdom had reached a production rate of up to 70% from some of its fields and plans to slow down the depletion rate, Naimi said.

It has also increased its focus on growing markets such as China and India. Asia accounted for around 60% of Saudi crude exports in 2010 and Saudi Arabia is the top crude oil supplier to China, the world's second-largest oil consumer.

OPEC

Saudi's influence has also helped to smooth the internal politics of OPEC, notably the tensions between the kingdom and Iran, the group's second biggest producer.

The rapprochement has meant the end of fractious OPEC meetings and made for more cohesive policy-making.

The Saudi economy remains heavily dependent on oil, which accounted for about 85% of its budgetary revenue in 2010 and around 31% of its gross domestic product, leaving the kingdom exposed to price volatility.

Under Abdullah, the kingdom has steadily raised its oil price expectations, up from a USD 25-a-barrel objective set in 2000 when oil prices rose above USD 30 and forced OPEC into a dialogue with world consumers.

Saudi's preferred range has since risen to around USD 70- USD 80 a barrel, after King Abdullah in late 2008 named USD 75 as the level acceptable to producers and consumers when the market was nose-diving from the record high of nearly USD 150 hit in July of that year.

Aramco's proven oil reserves -- ie those that are almost certainly recoverable -- are estimated to exceed 264 billion barrels, roughly one fifth of the world's total.

The kingdom has seven domestic crude oil refineries and plans to add 3 more refineries to double its refining capacity from 2.1 million bpd now. It has refining and retail assets in the United States, South Korea, China, Philippines and Japan.