A PRESTON CLIVE FORECASE New Saudi King Salman, left, and deceased King Abdullah, right (IMAGE: gulfnews.com) With the announcement this morning of the sudden death of legendary90 year old King Abdullah of Saudi Arabia, and the subsequent announcement of the ascension of his brother Prince Salman to kingship in a very smooth transition of power, all eyes--and the forces of themarkets--have been keenly attuned to any motions hither or yon that signal a break from the policies of the deceased king. Abdullah, a fixture of Arab politics for decades, leading a nation that is steward of twenty percent of all oil exports on the planet, one that is also the custodian of the holiest sites in Islam, was a shrewd and clever leader who had, during the present crisis of oil oversupply and tumbling prices, refused to defend the price of oil by cutting output. He chose instead to defend the Saudi market position, rather than providing an “in” to other market players in the long term by cutting back on the spigot. The market forces are keenly attuned to any motion from the Saudi kingdom: when Abdullah's death was announced, the price of Brent crude spiked up over $49.80 a barrel. Then the announcement of the smooth transition from brother to brother, and corresponding statement from the new King that all present policies of production output would remain in place wiped out any gains had since the morning. It’s clear—and utterly understandable—that the new king is going to maintain the policies of his newly deceased brother. Nothing would be more shocking in terms of decorum than to, in the midst of the announcement that he has just ascended to power while mourning his dear brother, blatantly and boldly erase that brother’s most profound economic-industrial policy as it pertains to the nations’ wealth and market position. So things will remain as they are—for now. But with production of their US ally spiking up to incredibly high levels via shale gas operations exceeding all expectation, one has to wonder when the short term ends and the long term is acknowledged to be something one is in the midst of. When does the long term benefit of stoical maintenance of the status quo begin to pale beside the ongoing short term pain of a decaying treasury crying out for lost profits? Time will tell—and the market will be paying manic attention, believe it. Preston Clive 1/23/2015***