OPEC has agreed to a cut but that is not what will trust oil prices over $100 a barrel.  A much more important and potentially devastation scenario will push oil upward if it occurs. I say if but the chances are very high. I am talking of a political event and crisis that no one is talking about but should.

I am talking about the potential downfall of the Saudi Royal family. The current situation in Saudi Arabia is getting more and more dangerous and will lead to a coup that will oust the current king and his son at best. The father and son duo have in a relatively short amount of time created:

  • The Yemen war which has been a disaster militarily as well as politically with the Houthis still holding on with no sign or weakening. Near the Saudi Yemen border, the Saudi border guards and Amy have been getting a beating with many towns abandoned instead of being defended.
  • Doubled down in Syria but Russia has decided enough is enough and is and will crush the Saudi/Qatari/Turkish backed Jihadist. With Assad still in power and potential able to retake most of Western and Central Syria it is another Saudi failure and humiliation.
  • The Saudi Economy is in shambles after the devastating policies to drive oil prices down and gain market share.
  • Accepting Iranian and Iraqi terms for an oil production curb deal was at best politically embarrassing for Saudi Arabia and an acceptance that Salman’s strategy failed.

King’s Salman reign has been nothing but one failure after another. Worse of all there has been a major internal shake up when he took power.  He named Muhammad bin Nayef the crown prince end then stripped him of most of his powers and transfered nearly everything to his son Mohammed Bin Salman. Neither by the way are the sons of Muhammad Ibn Saud the founder of the Kingdom and where all other kings that followed received legitimacy from including Salman. So we have foreign adventures that are in shambles, an oil strategy that is now recognized as a failure and a future change in succession that has never been tried. So what could go wrong?

Well how about the young deputy crown prince creating more and more enemies at home by accumulating powers and sending the Kingdom down one failed venture after another and running the economy literally into the sand. Mohammed Bin Salman basically runs (King Salman is reported to be senile) the show and he reminds of one of those young consultants out of graduate school full of text book ideas but with 0 experience and worse yet is a cocky son of a bitch. What happens? Dumb idea after dumb idea is put into place which leads to  foreign workers not being paid, unemployment for young people between ages 16 and 29 is 29%, government contractors are not getting paid and the coffers are getting empty.

His reforms are also are pushing aside religious hardliners. He recently stripped the religious police of arresting powers called for education reform and for a less strict . His new Vision 2030, a plan to change Saudi Arabia is promoting phased reduction of most subsidies to the people, increase private sector employment when the government is responsible for 70% of jobs, and calling for less bureaucratic appointments a long time bread and butter for princes.

If you want to commit suicide in Saudi Arabia is it pretty simple:

  1. go after the princes money  Check
  2. cut the peoples money Check
  3. take the power away from the religious fanatics Check

Saudi Arabia’s Royal family initially an still today gets its power from the allegiance of the tribes and the religious conservatives. The Royal family also derides allegiance in the form of a social control with the people of Saudi Arabia which is basically “You don’t work and we pay you and you let us do what we like”.

Is your stomach getting a little queasy? Well it should. The economy is failing, Russian and Iranian influence on the rise in the Middle East, reforms making many traditional power players angry, and a internal battle for succession are all creating the right situation for a coup within the palace but that would be good news. So a coup is good news so what is the bad news?

Bad news is if a coup doesn’t happen and things get worse politically and economically then the thousands of Saudi Jihadists that will be returning home from Syria and already feeling betrayed by the Royal family might decide to do something about it.  The hardliners and the tribes might just side with them and we have a major problem.  We have a powder cage that could go off at any time and no one and I mean no one is talking about it. A coup a we get oil at $100 a barrel the later and we get $150+. So when that happens don’t be shocked because I told you so and it will happen and soon.