Four years after the Arab Spring, the lynchpin of OPEC faces more social unrest, as Saudis digest unaccustomed austerity amid plummeting oil prices, costly military intervention in Yemen and increased tension with Iran.
The ultra-hardline regime in Saudi Arabia launched an austerity budget late last year to help combat a ballooning deficit. It is even considering listing shares in its ginormous state-owned oil company, Saudi Aramco, in a bid to raise funds.
The curtailment of mass subsidies on utilities and lavish public spending marks a change, as the Arab state has previously been generous in redistributing its massive oil wealth — partly as a means to stave off public restiveness with absolutist rule.
"With a decline in social spending and a reduction in subsidies comes the risk of rising domestic turmoil, as highlighted by the Arab Spring in 2011 when high inflation, lower growth and inequality resulted in mass demonstrations across the Middle East," Alberto Gallo, head of global macro credit research, said in a research note last week.
Brutal repression
Saudi Arabia brutally repressed protests during the Arab Spring in 2011, when uprisings sprung up across the Middle East. While rulers were forced out of power in Tunisia, Egypt, Libya and Yemen and destabilized in Bahrain and Syria, Saudi's theocratic monarchy remained entrenched.
The House of Saud continues to take an extremely tough line on any hint of political dissent, which reportedly remains a major concern for leaders. It passed a law in 2014 that categorized a broad array of non-violent offenses as "terrorism," including "endangering national unity" and "harming the reputation of the state."
A crackdown through 2015 culminated in the execution of 47 people in a single day this month, shocking the world and ultimately leading to the cessation of diplomatic relations between Saudi Arabia and long-term rival, Iran.
Among those executed was Nimr al-Nimr, a high-profile cleric of Shiite Islam, a minority group in Saudi Arabia that claim persecution by the regime. While Saudi Arabia says that al-Nimr was executed for terrorism offences, critics says his real crime was denouncing the ruling dynasty and helping organize anti-government demonstrations.
His death has stirred tension in the east of Saudi Arabia, where the majority of its Shiite population of roughly 20 million is situated.
"Prolonged low oil prices combined with escalation of tensions between Iran and Saudi Arabia could lead to a break out of violence in the eastern province of the kingdom, where most of the Shiite population is concentrated," Garbis Iradian, chief economist for the Middle East and North Africa at the Institute of International Finance, told CNBC.
"While the authorities could repress any violence, there is a risk that such violence could get out of control and spread to other areas in the kingdom if the economy contracts for more than one year and national unemployment increases significantly," he added.
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High youth unemployment
Saudi Arabia's economy grew by 3.4 percent in 2015, according to the International Monetary Fund (IMF), which sees growth slowing to 2.2 percent this year. That is far below the recent peak of 10.0 percent, posted in 2011, when crude oil prices averaged around $110 per barrel.
Perhaps more worryingly for the House of Saud, youth unemployment — associated in many countries with social unrest in the wake of the global financial crisis — is extremely high. Nearly 30 percent of those aged 15-24 years-old were unemployed in 2014, the most recent year for which the World Bank has data. This figure has held fairly steady since 2007.
A young and growing population means that high volumes of workers enter the Saudi Arabian labor force each year. The challenge is acerbated by the fact that private sector jobs are often filled by expatriates. Plus, the job market is becoming more competitive as female participation increases — albeit slowly and from a very low level.
Luay Al-Khatteeb, a foreign policy fellow at the Brookings Institution, said that youth unemployment was "crippling, if not seriously undermining the government's hold on power" and that Saudi Arabia needed to create at least 3 million new jobs by 2020 to combat the problem.
"The 'mother of all problems' facing the nation is not a growing budget deficit, regional terrorism and sectarian tensions, but the growing and endemic youth unemployment that continues to endanger Saudi Arabia's national security," Al-Khatteeb said in a comment piece posted last month that also appeared in The Huffington Post.
"Saudi Arabia needs to increase public-private sector cooperation to absorb millions of unemployed youth and avoid rendering them to the abyss of terrorism or civil unrest," he added.