Instability worries as Saudi crown prince replaced by son of King Salman

The king of Saudi Arabia has unexpectedly removed nephew Mohammed bin Nayef from his influential role as crown prince and deputy prime minister, replacing him with his son Prince Mohammed bin Salman.

King Salman issued a decree on Wednesday confirming that his son will take up the position of deputy prime minister in addition to his current role as defence minister.

The current king ascended to the head of the House of Saud in 2015 following the death of Abdullah bin Abdul Aziz, both men being sons of the founder of the Saudi dynasty - King Abdul-Aziz, known as Ibn Saud.

The new 31-year-old crown prince has been a major influence behind significant reform in the kingdom in recent years, including its attempts to diversify its economy in order to make it less dependent on oil. He has also led Saudi involvement in the ongoing conflict in Yemen.

King Salman issued a decree on Wednesday confirming the decision

Bin Salman has been one of the main drivers behind the attempt to privatise state oil company Saudi Aramco. The oil firm is being prepared for an initial public offering on London or New York's stock exchanges, in what could potentially be the largest flotation in history.

According to the decree, Prince Mohammed bin Nayef has been relieved of all of his positions in the kingdom, after spending years as its counter-terrorism chief.

But it was Bin Salman who led Saudi Arabia's recent diplomatic offensive against Qatar, cutting diplomatic ties, closing the border and halting air and sea traffic with Qatar, and urging "all brotherly countries and companies to do the same" in order to protect themselves from "terrorism and extremism".

Naeem Aslam, chief market analyst at ThinkMarkets UK, asserted that the continuation of Bin Salman’s policies would create instability for the country’s economy.

Aslam said: “From an economic perspective, the first element which investors seek is the stability in the country. Unfortunately, we do not see Saudi Arabia becoming more stable if the crown prince carried on with his policies and strategies. The outcome would create more pressure on the Saudi currency and stock market in the coming time.”