The Saudi king named his 31-year-old son his successor — here’s what it means for the kingdom’s future

Saudi Arabia's King Salman appointed his 31-year-old son, Mohammed bin Salman (nicknamed "MbS"), as crown prince on Wednesday in a shuffle that propels him to being first-in-line to the throne.

The king also stripped 57-year-old Prince Mohammed bin Nayef — MbS' cousin — of his title as crown prince and removed him from his position as the kingdom's interior minister.

The decision was approved by 31 of the 34 members of the Allegiance Council, the group responsible for determining the future succession to the throne. Saudi news outlets portrayed the switch as "an orderly reshuffle."

Saudi stocks climbed, but otherwise the market reaction was muted, likely reflecting the fact that many observers had been expecting this to happen. (Although, some had noted the timing was unexpected.)

Analysts argue that the promotion of MbS, who was already the defense minister and the chair of the Council of Economic Developmental Affairs, likely ensures the continuation of the kingdom's domestic and foreign policies. He is seen as the key architect of the Vision 2030 plan, addiction

MbS "has taken an increasingly important role in foreign and domestic policy decision in Saudi Arabia in the past year and we believe his promotion to crown prince — effectively further empowering him — will result in broad policy continuity," said analysts at BMI Research in a note to clients.

"However, while potentially economically beneficial, with bin Salman a major proponent of reforms to privatize elements of the Saudi economy and entice foreign investment into the country, the move also suggests Saudi Arabia will continue to embrace a hawkish foreign policy, further heightening tensions across the Middle East," they added.

Notably, if Saudi Arabia continues its more hawkish foreign policy, that could increase the political risk in the region and influence oil prices.

The cutbacks were originally part of MbS' plan to revamp the kingdom's finances amid the lower-for-longer oil environment and the on-going costly regional conflicts. However, the pain from the austerity was front-loaded, and Saudis were starting to feel it.