JUST HASTENING THEIR OWN DOWNFALL:

In a part of the world where half a dozen long-lived regimes have been completely or partially overthrown since 2001, the possibility that rulers currently enjoying the financial security derived from extensive oil reserves might lose their access to that resource unexpectedly is a very real worry. [...]

Whether the execution of the cleric, Nimr al-Nimr, was meant as a provocation or not, the result has been a sharp escalation of tension that is rattling not just global oil markets (prices were on a rollercoaster all Monday morning) but in the perception of the Saudi government's ability to continue paying its debts. On Monday, investors began demanding higher rates of return on the kingdom's debt securities.

That's in part because, should things go from bad to worse between the two regional powers, Saudi Arabia may have picked a fight it can't win.

"The Saudis aren't quite as clever as they think they are," said Hanke. "Iran holds almost all the cards in the Gulf because of the Strait of Hormuz. If they shut it down, that's the end of the game."

The United States and its allies expect Saudi Arabia to step up in battling IS and al-Qaeda, and in the end, that is how the alliance will be judged, at least in Washington and European capitals. The threat from IS to the kingdom is likely to grow. Saudi security forces broke up a cell linked to IS in 2014, and the terrorist group claimed credit for two bombings in 2015 that killed 36 people. IS continues to hold ground in Iraq and Syria, maintains a cell network in Europe and is expanding its presence in Afghanistan, Yemen and North Africa. The kingdom is, of course, not a "fragile" state like Iraq, Syria, Yemen, Libya or Afghanistan, but neither is France or Belgium. Unlike Syria and Iraq, which have ethnically and religiously diverse populations, Saudi Arabia's population is 85-90% Sunni Muslim. And if IS continues to lose ground in Syria and Iraq, as it did in Ramadi last week, it may seek other nearby targets to rally its followers. As this column reported in December, the kingdom's hosting of the Syrian opposition conference last month may eventually serve to turn IS and al-Qaeda on the Saudi and Western-backed armed groups, which have been mostly preoccupied with fighting the Syrian government until now. In other words, IS may be taking the fight to Saudi Arabia, even if the kingdom would prefer to keep its prime focus on Bashar al-Assad and Iran.

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