By this, King Salman has given the 31-year old almost unprecedented powers as the world’s leading oil exporter implements transformational reforms.
A royal decree appointed Mohammed bin Salman crown prince and deputy prime minister.
He retains defence, oil and other portfolios.
It said Crown Prince Mohammed bin Nayef, a counter-terrorism chief admired in Washington for putting down an al Qaeda campaign of bombings in 2003-06, was relieved of all positions.
Although Mohammed bin Salman’s promotion was expected among close circles it came as a surprise at a time the kingdom is facing heightened tensions with Qatar and Iran and is locked in a war in Yemen.
The royal decree said the decision by King Salman to promote his son and consolidate his power was endorsed by 31 out of 34 members of the Allegiance Council, made up of senior members of the ruling Al Saud family.
Always intent on dispelling speculation of internal divisions in the Al Saud ruling dynasty, Saudi television was quick to show that the change in succession was amicable and supported by the family.
Throughout the early morning it aired footage of Mohammed bin Nayef pledging allegiance to the younger Mohammed bin Salman who knelt and kissed his older cousin’s hand.
“I am content,” Prince Mohammed bin Nayef said. Prince Mohammed bin Salman replied: “We will not give up taking your guidance and advice.”
Analysts said the change ends uncertainty over succession and empowers Prince Mohammed bin Salman to move faster with his plan to reduce the kingdom’s dependence on oil, which includes the partial privatisation of state oil company Aramco.
“The change is a huge boost to the economic reform program…Prince Mohammed bin Salman is its architect,” said John Sfakianakis, director of the Riyadh-based Gulf Research Center.
Bernard Haykel, professor of Near Eastern Studies at Princeton, said the king’s decision was aimed at avoiding a power struggle between his son and Mohammed bin Nayef by setting the line of succession clearly.
“It’s clearly a transition that has happened smoothly and bloodlessly. Now it’s clear, it’s straightforward. That kind of clarity lowers the risk, there’s no question as to who’s going to be in charge.”
“Some people were predicting that this would lead to a division in the family and strife and some kind of revolt. I don’t see that happening.”
A senior Saudi official said the decision was taken due to what he called special circumstances presented to the members of the Allegiance Council.
He added that Mohammed bin Nayef supported the decision in a letter sent to the king.
The royal decree did not nominate a new deputy crown prince. The position is relatively new in Saudi Arabia where a king has traditionally chosen his own successor.
As deputy crown prince, Mohammed bin Salman has been responsible for running Saudi Arabia’s war in Yemen, dictating an energy policy with global implications and spearheading plans for the kingdom to build an economic future after oil.
That the royal succession in the world’s top oil exporter is closely scrutinized only makes the rapidity of Mohammed bin Salman’s rise to power, and the speed with which his better known cousins were brushed aside, more astonishing.
The announcement follows two and a half years of already major changes in Saudi Arabia, which stunned allies in 2015 by launching an air war in Yemen, cutting back on lavish subsidies and proposing in 2016 the partial privatisation of state oil company Aramco.
Financial analysts said Prince Mohammed’s promotion gave further assurance that key parts of radical reforms to diversify the Saudi economy beyond oil would continue.
“We do not expect to see any major changes to key areas of policy, including economic,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.
In 2016 Mohammed bin Salman, or “MBS” as he is widely known, announced sweeping changes aimed at ending the kingdom’s reliance to oil, part of his campaign to tackle systemic challenges that the kingdom has previously failed to address