[LINK] "How cheap oil could bring down the Saudi royal family"

[rfmcdonald]

Adnan R. Khan of MacLean's notes the precarity of the Saudi monarchy.

The execution of Sheik Nimr al-Nimr and 46 other people in Saudi Arabia’s capital of Riyadh last month was a curious bit of cruelty, even by Saudi standards. Nimr, a political activist and leading figure in the Shia reformist community, opposed the Iranian regime and considered the Assads in Syria “oppressors,” sentiments shared by the Saudi government.

His killing seemed to serve no purpose at a time when regional rivals Saudi Arabia, a Sunni power, and Shia Iran are locked in one of their worst cold-war flare-ups. The fallout was predictable, too: Iranian protesters took to the streets, storming the Saudi embassy and other consulates throughout Iran. Diplomatic relations, already on a knife’s-edge, all but collapsed.

“With the recent execution of Sheik Nimr, it looks like the door to a more cordial diplomatic resolution may have been all but closed by Saudi Arabia,” says Payam Mohseni, Iran project director and a fellow for Iran studies at the Harvard Kennedy School of Government. “The risk is now that tit-for-tat retaliations between the two countries may further raise the stakes and escalate conflict.”

So why did Saudi Arabia invite this trouble? The answer can partly be found in the fast-falling price of oil. With oil prices down 70 per cent in the past year and a half, and Iran on the verge of breaking out on the international stage after a nuclear limitation deal that led to a lifting of international sanctions, Saudi Arabia suddenly finds itself on the losing end of Middle Eastern petro-politics.

With some experts predicting oil prices could remain low for the foreseeable future—prices are currently around $30 a barrel (all prices in US$) and falling this week—Saudi Arabia faces the challenge of maintaining an expensive economic system based on patronage and almost entirely reliant on oil revenues.