* Interior Minister Mohammed bin Nayef is new Saudi heir
* King's son is second-in-line, sealing succession for decades
* Changes come during unprecedented regional turmoil (Adds quote on oil price)
By Angus McDowall
RIYADH, April 29 (Reuters) - Saudi King Salman appointed a new heir and made his young son second in line to rule on Wednesday, a major shift in power towards two princes who have overseen a more assertive stance at a time of almost unprecedented regional turmoil.
By making Interior Minister Mohammed bin Nayef, 55, crown prince and Defense Minister Mohammed bin Salman, 30, deputy crown prince, King Salman has effectively decided the line of succession for decades to come in the world's top oil exporter.
The appointments signal a tougher foreign policy, particularly towards regional foe Iran, but little change to a firm hand against dissent at home, where Riyadh this week said it had detained 93 suspected Islamic State militants.
Almost all powers under the king are now concentrated in the hands of the pair, who each chair committees determining all security and economic development issues in Saudi Arabia, and have led Riyadh's month-old campaign of air strikes in Yemen.
In another big shift, Salman replaced veteran Foreign Minister Prince Saud al-Faisal, who had served in the role since October 1975, with the kingdom's Washington ambassador Adel al-Jubeir, the first non-royal to hold the post.
Prince Mohammed bin Nayef, who replaces Prince Muqrin, the successor chosen by the late King Abdullah before his death in January, enjoys closer personal ties with U.S. officials than almost any other senior royal, diplomats have said.
The changes come as Saudi Arabia navigates the messy aftermath of the Arab spring and worries that its strategic partner Washington is disengaging from the region. It has broken with decades of backroom politics by bombing Yemen.
The Yemen move, closely associated with both heirs, is seen by analysts as indicative of a more confrontational foreign policy under Salman and his ruling team, who have worked to build a coalition of Sunni allies against Iran.
Riyadh appears increasingly determined to counter Tehran's allies, including in Syria, where Saudi-backed rebels against President Bashar al-Assad have recently made gains.
"I think we're going to see a more confrontational policy, faster decision-making and more long-term thinking. A leadership that won't hesitate from any confrontation," said Mustafa Alani, an Iraqi security analyst with close ties to the kingdom's Interior Ministry.
It follows what many Saudis see as a decade of growing Iranian influence across the Middle East coupled with concerns that the United States, long Riyadh's security guarantor, has stopped listening.
The appointment of Mohammed bin Nayef, who has better ties to the American establishment than any other prince, may help alleviate such concerns, along with the appointment of Jubeir, who also enjoys close ties with figures throughout Washington.
The rise of the Islamic State group in Iraq and Syria has also caused security threats at home including recent attacks on police and minority Shi'ites. Riyadh blames Iran's involvement in Arab countries for creating political chaos in which Islamic State can grow, while Tehran says it is caused by Saudi interference in the region.
Saudi Arabia faces long-term domestic challenges, including entrenched youth unemployment, unsustainable state spending and tension between religious conservatives and more Western-oriented liberals.
The reshuffle also touched the oil sector, hugely sensitive to financial markets as the world's biggest petroleum exporting country holds the key to global supplies.
In a statement on Wednesday, state oil firm Aramco described its head Khalid al-Falih as the outgoing CEO and president, but also as chairman of its board of directors, appearing to confirm an earlier report on al-Arabiya television.
Falih was named as the new health minister in Wednesday's royal decree. A new Aramo CEO has not been named but analysts said oil policy was not likely to change.
"I don't think there's been any disagreement about the idea of keeping up production, maintaining market share," Clement M. Henry, professor at Middle East Institute, National University of Singapore, said.
While Mohammed bin Nayef is a familiar figure both inside the kingdom and in the West for his role in quashing an al Qaeda uprising and leading Saudi policy in Syria, his successor as second in line to the throne, Mohammed bin Salman, is comparatively unknown.
Until four months and six days ago, the young Prince Mohammed had only served as head of his father's court, was a virtual stranger to the Saudi public and had had relatively little contact with the kingdom's foreign partners.
Since then he has become, as Defense Minister, the face of Saudi Arabia's newly-launched war in Yemen, with his bearded features rarely off television screens or street billboards, and is now established as a central figure.
"Mohammed bin Salman can grow into the job under Mohammed bin Nayef's supervision," Alani said.
The replacement of Prince Muqrin, Salman's youngest half brother, as crown prince means the present monarch will be the last of the sons of Saudi Arabia's founder King Abdulaziz Al Saud to rule after five of his brothers.
It also ends concerns about a line of increasingly frail, aged kings after Salman, who is 80 this year, replaced the 90 year old Abdullah.
"We don't want Saudi Arabia to be ruled by one ailing leader after another," said Jamal Khashoggi, general manager of al-Arab television station.
The move also solidifies Salman's own branch of the ruling family. Abdullah's only son in a position of significant power now is Prince Miteb, who is head of the national guard and was retained in his post on Wednesday.
The new deputy crown prince, who also serves as head of a top committee on economy and development, was replaced as royal court chief by Hamed al-Sweilam, the decree said, possibly to answer critics who said he had too many jobs.
(Reporting by Sami Aboudi, Mostafa Hashem, Maha El Dahan and Reem Shamseddine and Henning Gloystein; editing by William Maclean and Philippa Fletcher)
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