The Central Bank of Oil.

• Author: Verleger, P.

The attacks on Saudi Arabian oil facilities on September 14 should have sent oil prices up sharply. Market disruptions of that magnitude have always raised prices. Based on studies of past episodes, in this instance a price increase of more than 100 percent should have occurred.

But oil prices did not increase. A month later, they were 2 percent lower than before the attack. Markets remained stable for a very simple reason: Saudi Arabia acted quickly to address a potential supply interruption.

The world escaped economic disaster because King Salman had replaced Khalid al-Falih as the country's oil minister with his son, Prince Abdulaziz bin Salman, six days before the attack.

For two decades before the prince's appointment, engineers had set oil policy in Saudi Arabia. The oil minister from 1996 to 2016, Ali al-Naimi, trained as an engineer at Lehigh University and Stanford. He then worked his way up through Aramco, becoming chief executive officer before he became oil minister.

Naimi's replacement, Khalid al-Falih, also trained as an engineer, earning degrees from Texas A&M and King Fahd University of Petroleum and Minerals. He, too, rose through the ranks of Saudi Aramco.

The engineering backgrounds of Naimi and al-Falih seem not to have prepared either for dealing with commodity market volatility.

Saudi Arabia's actions after the September 2019 attacks were critical to preventing oil prices from increasing. Prince Abdulaziz announced that production was being restored and vowed that Saudi Aramco would honor its commitments to customers that month by drawing from reserves.

A Wall Street Journal report two days later indicated that Saudi Arabia was buying crude oil from other producers to meet its needs.

These and other actions were precisely what the market needed. Over those weeks, a central bank of oil emerged.

The willingness to supply liquidity is what immediately distinguishes central banks from...