After Shocking Saudi Shakeup "Not A Question Of If But When New Escalation With Iran Starts"

Two days ago, when reporting on the surprising "terrorist attempt" by Iran's National Guard on a major Saudi offshore oilfiled (at least according to Saudi media), we said that "if the Saudi account of events is accurate, and if Iran is indeed preparing to take out Saudi oil infrastructure in retaliation or otherwise, the simmering cold war between Saudi Arabia and Iran is about to get very hot." This in turn followed an earlier analysis on the ongoing Syrian war in which we said that "the next major regional conflict appears set to be between Saudi Arabia and Iran. All it needs is a catalyst."

That catalyst, according to energy consultancy Petromatrix, may have been revealed overnight with the stunning Saudi royal shakeup in which the King announced he was stripping the current Crown Prince, his nephew Mohamed bin Nayef (MBF), of all titles and obligations, and replacing him with his son Mohamed bin Salman (MBS).

Summarizing the event, Petromatrix analyst Olivier Jakob wrote that "the day starts with the Saudi Crown Prince sent to retirement and replaced by the deputy Crown Prince Mohammed bin Salman (MBS). MBS was already the strong hand in Saudi Arabia, this latest development, and the purge that goes with it, confirms that he is the de-facto king of Saudi Arabia. Under his watch, Saudi Arabia has developed aggressive foreign policies (Yemen, Qatar...) and he has not been shy about making strong statements against Iran."

The punchline: "with MBS now having greater control of Saudi Arabia and with Jared Kushner having a large control of the White House it is not really a question of if but rather of when a new escalation with Iran starts."

Jakob wasn't the only one to react strongly to the Saudi royal shakeup. Below, courtsy of Bloomberg, are several other notable reactions:

John Sfakiankais, director of research at Gulf Research Center in Riyadh

  • The crown prince is “the architect of the Vision 2030” and the Aramco IPO is “a cornerstone of the vision”
  • "Saudi Arabia will even try to push for more dominance in OPEC. Bringing in Russia to the deal was hard without Prince Mohammed’s role behind the scenes”
  • “He will also make sure that the country in the long-term will move away from oil. But in the short-term Saudi Arabia will still remain focused on using oil revenue to support its diversification plans”
  • "Saudi oil policy will be business as usual meaning that they will continue to look at supply imbalance in the market and if the situation requires a further cut or interference, the Saudis will consider taking further actions”
  • “Deepening the cuts of OPEC is now a very likely scenario if oil prices continue to tumble”

Rodger Shanahan, a research fellow at the Lowy Institute for International Policy in Sydney.

  • “Saudi has tried to assert its authority over a range of regional events, and by cementing the question of succession at this time, the region is on notice that this direction will be pursued for the long term”
  • “MBS’s youth means that there will be no interim succession -- he will be in power for a long time and has been a very public proponent of a robust Saudi presence in the region”
  • “MBS has been very public in naming Iran as the major threat and we should expect to see a continuation of tensions and proxy conflicts in the region”

Amir Handjani, senior non-resident fellow at the Atlantic Council, speaking from New York City

  • “MBS has been consolidating power is various ministries that were long the domain of Muhammad Bin Nayef”
  • While the promotion is “hardly surprising” it “does amount to a political earthquake for Riyadh”
  • Prince Muhammad Bin Nayef has had “a long track record” of combating terrorism in the kingdom and strong relationships with intelligence communities” in many Western capitals
  • MBS “so far has had a disastrous war in Yemen to contend with as he tries to reorient the Saudi economy from being dependent on oil”

Ghanem Nuseibeh, founder of Cornerstone Global Associates:

  • Prince Mohammed Bin Salman is “seen as the modernizer” in Saudi Arabia and the appointment “increases his remit” and leverage to introduce reforms
  • Previously, his focus was on economic and social reforms, will now have “ability, clout and leverage to implement reforms in politics as well"
  • Appointment is “a vote of confidence” by the king and the succession council, which “voted overwhelmingly in his favor on what he has been doing so far
  • MBS “has really been the powerful man in Saudi Arabia ever since his appointment as deputy crown prince,” and while today’s announcement doesn’t change much on the ground, it “removes impediments that he had in that he had someone more senior to him who was perhaps a bit more conservative;” “now he’ll have a freer hand”

Rami Khouri, senior public policy fellow at the American University of Beirut:

  • “Evidence suggests that Mohammed Bin Salman is daring, that he does bold things, but he hasn’t done them very well,” such as Saudi Arabia’s involvement in Yemen and Syria, and the standoff with Qatar
  • “Seems to have a lot of support among many Saudis, especially younger people”
  • Historically, Saudi Arabia has been extremely cautious and low key, but that’s changed since Arab uprisings
  • “The region is changing around them radically in ways they do not like -- they do not like democratic elections or a free, liberal press, they don’t like the spreading Islamist movements, they don’t like Iran having good ties with the West; they can’t seem to stop them, and this is their reaction”

Amin Saikal, director of the Centre for Arab and Islamic Studies at the Australian National University.

  • Prince Mohammed Bin Salman "has been at the forefront of Saudi Arabia’s isolation of Qatar, the war in Yemen, and enmity with Iran," Saikal said. "Now that he’s entrusted with more power, one cannot be too hopeful for improvement in the regional situation."