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Crown Prince Mohammed bin Salman is moving on to his next target: Iran

  • Saudi Arabia's Crown Prince Mohammed bin Salman, nicknamed MBS, has rapidly consolidated power within the kingdom.
  • With his position secured and his rivals vanquished, he is moving on to his next target: Iran.
  • With hostilities rising, war is seeming more inevitable, which increases the likelihood of rising oil prices.
Saudi Arabia's Crown Prince Mohammed bin Salman (L) meets with US President Donald Trump in the Oval Office of the White House on March 20, 2018 in Washington, DC.
Mandel Ngan | AFP | Getty Images
Saudi Arabia's Crown Prince Mohammed bin Salman (L) meets with US President Donald Trump in the Oval Office of the White House on March 20, 2018 in Washington, DC.

The new face of Saudi Arabia makes his Washington D.C. debut this week, and you better take a good look because, at 32-years old, he will very likely be with us for a while.

Saudi Arabia's Crown Prince Mohammed bin Salman, nicknamed MBS, has rapidly consolidated power within the kingdom. He iced out his rivals by charging many of them with corruption, extracting forfeitures of great sums of wealth that the Saudi government claims were ill-gotten.

With his position secured and his rivals vanquished, he is moving on to his next target: Iran.

The topic of Iran is a key agenda item for his meeting with President Trump on Tuesday. President Trump should find himself well-versed on the topic, which he discussed at-length with Israel's Prime Minister Netanyahu, earlier this month.

Iran is serving as a unifying force among its Middle East neighbors. Both Israel and Saudi Arabia see Iran as a grave threat, to such a degree that the two countries, once fierce enemies, are now sharing intelligence and cooperating in other ways. Netanyahu has alluded to this budding friendship by noting that Israel "has friends in the Middle East."

MBS compared Iran's Ayatollah Khamenei to Adolf Hitler in an interview over the weekend, and he termed the Iran nuclear deal as a "flawed agreement" echoing President Trump's position. President Trump's nominee for Secretary of State is expected to push hard to see the U.S. terminate the Iran nuclear deal, which had been favored by former Secretary of State Tillerson.

We are now dealing with a much more forward-leaning Saudi Arabia that is also seeking to modernize.

But, has the leopard really changed its spots?

The recent corruption purge took on a hint of irony, when it was revealed recently that MBS himself has some extravagant tastes that include a palace in Versailles, France, and the purchase of the most expensive art work in history, Da Vinci's depiction of Jesus, for $450 million, among other goodies.

MBS is being championed, in some circles, as standing against radical Islam, but he is also standing as Sunni Muslin against Islam's other faction, the Shia branch, which Iranians, mostly, adhere to, and there is nothing new about that.

There has been a proxy war raging between Iran and Saudi Arabia in Yemen and Syria. The Saudis recently trotted out an unexploded rocket that was launched from Yemen into the kingdom that bore Iranian markings. Saudi air sorties regularly bomb Iran-backed Houthi rebels in Yemen.

The situation vis-à-vis Iran is escalating. A second "coalition of the willing," the term used to describe allies in the second U.S. war with Iraq, may be forming to take on Iran more directly, and the roster looks to include Saudi Arabia, U.A.E, Israel, and the United States. Look for triparty agreement on Iran among the U.S., Saudi Arabia, and U.A.E. to be announced this week, as a prelude to a broader grouping.

Saudi Arabia used to be a quiet giant in the Middle East, more than happy to be the world's largest source of oil, minting petrodollars and spreading the wealth, internally, to keep the powers that be in charge and the populace placated.

MBS is making it clear that is no longer the case. Get ready to hear Saudi Arabia roar, with all that brings with it.

Saudi Arabia will look to use its power and influence to remake the Middle East in its image. The kingdom will not sit idly by and allow Iran to gain de facto control of Iraq, which has parliamentarian elections in May. Iran is actively trying to engineer the return of former Prime Minister Maliki.

The new Saudi doctrine is also being seen in the form of the blockade of Qatar, which several other Gulf nations have joined in.

It does appear that policies and regional ambitions of Saudi Arabia and Iran are putting them on a collision course that will result in direct hostilities, and Saudi Arabia has partners willing to assist it with such a fight, that coalition of the willing.

The rhetoric and apparent intentions of MBS have reinflated the risk premium in oil prices. If it keeps up and if the U.S. withdrawal from the Iran nuclear deal becomes a reality, WTI oil prices will head higher, upwards of $70-plus. Absent these tensions, the prices is more appropriately in the low $50 area.

Commentary by John Kilduff, a partner at Again Capital, an investment-management firm that specializes in commodities. Follow him on Twitter @KilduffReport.

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