The real issue, of course, is who comes after Abdullah.

King Fahd has not been running the world's largest family owned petrol station for some time now.

And right now, the Saudi royal family does more than run the  central bank of oil.  Saudi oil is once again making Saudi Arabia into a financial power.

Back in say 2002, when Saudi Arabia was producing about 8.5 mbd that is sold at (ballpark) $30 a barrel, it was taking in about $88 billion a year.

With production of 9.5 mbd, maybe more, and an oil price of $60 a barrel, Saudi Arabia's oil now generates roughly $208 billion a year.

That is an extra $120 billion.  Some of this cash is being spent, but certainly not all.  OK—Riyadh is not as financially important as Beijing.  No one is.  But Riyadh and Moscow certainly are in the next league ... both have a ton of spare cash to play with.

Most of Russia's spare cash shows up its reserves.  Most of Saudi Arabia's does not ...

One of the bigger puzzles out there (at least to me) is where Saudi Arabia is putting its spare cash.  We know that at the end of the day its cash has to be financing the US, whether directly or indirectly.   Every country that is running a current account surplus has to finance the US to sustain the current global equilibrium.  But the mechanisms that make the oil exporters' surplus available to fund US deficit remains a bit of a mystery.

And it is not just Saudi Arabia.  The Saudis have about a 1/3 of OPEC's total output.   The other OPEC countries will get $240-250 b more from their oil in 2005, assuming oil stays around 60.  If it is closer to 50, they only have an "extra" $170b.  Some of that is being spent, but not all.

Oil alone is a big factor in the global savings glut.

Those who have registered for RGE can find more links on Saudi Arabia over on the RGE Saudi Arabia page.

Updates:    Check out The Capital Spectator on Saudi Arabia.

And it seems like King Abdullah may be more open about Saudi Arabia's interest in .... drumroll please ... high oil prices.

From the FT:

The death of King Fahd on Monday took Saudi Arabia one step closer to advocating a policy of high oil prices.

The kingdom has long sought to balance its need for revenues with the concerns of its consumers - particularly the US - over the impact of high oil prices on economic growth. But in recent years, as the population of Saudi Arabia has grown, the scales have tipped towards the country's domestic concerns, with Riyadh supporting higher oil prices.

King Fahd's death would not change Saudi Arabia's general approach, senior Saudi energy officials said yesterday. But it might allow the kingdom to become more open about its hawkish price stance.

Actually, it is pretty easy for Saudi Arabia to be hawkish about price when it does not need to take its own production offline to keep prices high.   The era of Saudi spare capacity seems over -- See today's WSJ article on the difficulty forecasting oil demand, and the growing importance of forecasting demand when supply cannot quickly adjust to match demand.