Forget about Iran...the quickest way to that kind of price spike is if the Arab Spring actually takes hold in Saudi Arabia, and the storm clouds are gathering, warns Marin Katusa of Casey Research.
There is little that would rock the oil world more than a revolution in Saudi Arabia. But with a coming leadership crisis, it is becoming all too likely.
Saudi is facing major economic challenges, as dramatic increases in social spending and domestic fuel consumption eat through the kingdom's all-important oil revenues.
Saudi Arabia is smack in the middle of the Middle East, an ever-tumultuous region currently rocking and rolling more than usual, as the Arab Spring challenges longstanding autocratic assumptions, while war-torn Syria and defiant Iran tip the delicate Sunni-Shia religious balance in the world's most important oil region.
While the House of Saud might present itself as a stable, strong, and cohesive royal family, in truth the king and his successors are growing old and incapacitated in a throne room full of competing contenders. Meanwhile, the only other organized social group in the country—the Islamists—are waiting just outside the door.
Want to see oil at $300 a barrel? To see $300 oil, or to watch the news as Saudi troops attack Tehran, or to see a stranglehold on US oil imports, watch what a failed succession battle in the House of Saud that ends up destroying the whole family and ushering in an Islamist age in Saudi Arabia would do.
It could happen sooner than you think.
A Shaky House of Saud
The king of Saudi Arabia, Abdullah bin Abdulaziz, is almost 90 years old. In Saudi Arabia's royal system, the throne passes not from father to son, but from brother to brother. The problem with the system is that none of King Abdullah's brothers are exactly young and full of vigor.
Crown Prince Salman, next in line to the throne, is already 76. He got the Crown Prince nod after two of his elder brothers died. The remaining brothers now average 80 years of age.
A king who ascends the throne in his seventh or eighth decade is unlikely to have the energy or even the time to enact significant reforms. And reforms are needed.
I'm not pushing democracy—Saudis don't generally want democracy. What I'm talking about are the endemic problems that are battering the world's biggest oil producer: high unemployment, a corrupt bureaucracy, a crippled economy, a weak education system, and a society full of frustrated youth.
While the country crumbles, the three pillars that have long supported the royal family are also weakening:
The country's foreign relations are little better. The Middle East is in turmoil, and Saudi Arabia's longstanding alliance with the United States is in distress.
Alongside these tangible problems is a multitude of intangible challenges that are revolutionizing the country. The regime used to control the population by controlling access to information, but of course that age is now almost over. The Internet has connected young Saudis with the rest of the world, and that worldview is prompting them to question some of the rules of their society.
Even the religious establishment in Saudi Arabia is seeing its power eroded. Young Saudis are increasingly independent, using the Koran to guide their decisions without following specific decrees from a particular religious leader.
The fact is, Saudi society today bears little resemblance to the passive masses of just a decade ago, and a decade from now the difference will be even bigger.
Trying to lead his country through these modern challenges is a 90-year-old king, backed by a 76-year-old crown prince and their octogenarian brothers. Not surprisingly, it's not working very well.