Saudi Shakeup Sees Bin Salman Take Over

His time as Defense Minister has been marked by increased aggression and that should be our default position until events tell us otherwise. And that means ratcheting up tensions with Iran. We’ve gotten hints of this already with the attack on Tehran two weeks ago, which Iran claims was orchestrated by Saudi Arabia, and the counter-incident with an Iranian boat near the Saudi offshore oil fields which the Saudis say was launched in response by Iran. From my perspective, the attempt to isolate Qatar has already bogged down like the war in Yemen.

Saudi Arabia’s government is facing an existential threat. Low oil prices are killing its economy. Its persistent budget deficit is the kingdom’s Achilles’ heel and its reserves are draining quickly. This is why bin Salman has pushed for the Saudi Aramco (Private:ARMCO) IPO at a $2 trillion valuation, which Wall St. is having a hard time selling to investors.

It needs the capital injection to attempt any broadening of its economy. Bin Salman’s Saudi Vision 2030 plan depends on maintaining a high enough oil price to fund it. This is a $373-billion project.

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