Macroscope | Civil war in Saudi Arabia is an outlier risk that could send oil prices skyrocketing

I had a young friend at business school that came from a storied family who had owned and run a significant business for 147 years. I won’t name him but let’s call him Sean.

Sean’s family’s business was a senior listed company in a developed market and was run by an older family member. Armed with a fine business school education, Sean, 26, launched a bid to take the company private. He succeeded, against all odds, but only by loading the company with huge debt just before the stock market crashed in 1987. The company folded two years later – that ended a century and a half of family leadership and a merry-go-round of temporary owners and asset sales.

Youth succeeded through dedication, boldness, and perseverance – only to fail through a lack of years, perspective, wisdom and experience. It would probably have worked under most circumstances, especially if it had been delayed, but it was not to be, and the company’s independence sank with barely a bubble.

The world has watched breathlessly as 32-year-old Crown Prince Mohammed bin Salman (or MBS to his observers) and son of King Salman of Saudi Arabia launched a takeover bid for the country that is the swing pumper in the world’s oil supply.

His rise has been meteoric, from minister of defence and crown prince in 2015 to earlier this year being made heir to the throne. During his promotions, Saudi Arabia has been seen to be uncharacteristically proactive in local politics, picking fights with extremist groups in Yemen, with the state of Qatar, and especially with Iran; a natural adversary who follows a different brand of Islam. MBS has also been seen as a liberal influence, behind the relaxation on the ban on women driving in the kingdom although dissidents still serve long prison terms and face execution.