Saudis Will Need to Postpone Projects or Liquidate to Support Their System

The complete severing of Saudi exports puts the KSA in a real pickle. They will need to feed the welfare state to keep the natives happy. They can ill afford to expand the war against Iran.

The US is supposedly running “operation economic outcast” on Iran but, very concretely, it is the Saudis who are being “outcasted”. The US is now incapable of defending KSA.

BREAKING: New high-resolution satellite imagery shows the pumping station on Saudi Arabia’s East-West oil pipeline burned out end to end, with the entire process area blackened and crude oil that escaped the site pooled across the desert beyond the perimeter, per Vantor imagery. https://t.co/DFJAplGNcC pic.twitter.com/uQEdn2YVFe

— The Hormuz Letter (@HormuzLetter) September 14, 2026

I spent some time with ChatGpt gaming this out. We discussed a Minsky Moment (MM). Chat says, correctly I believe, that MMs aren’t headlines but more behind the scenes pullbacks in funding pools. In particular this would be delays and postponements of Ai buildouts that KSA is involved  in.

We theorized that the Ai slow down announcements put forth by the tech bros may be their realization that an MM is approaching and thus a necessary emergency course adjustment is paramount.

We Must Pace the Frontier pic.twitter.com/sezx1DnTZn

— Directive Creator 🪥 (@Escapation) September 13, 2026

Alot of KSA capital is tied up in their Public Investment Fund but it is not liquid cash. Chat says the foreign currency reserves are their big war chest. Gold is not a major lever for KSA.

Those holdings are USD and Euro deposits in banks, US Treasuries (KSA has $142 billion) and stocks. This would be manifested in a withdrawal pattern that impacts those banks and the trillion UST a month rollovers and new debt financings. European countries are also caught up in debt doom loop cycles.

KSA would roll maturing issues off and be absent for the new issuance market. This is an inverted petrodollar condition.

KSA could borrow their shortfalls instead but that is a dwindle dee dwindle dumb proposition. It would still put pressure on the bond markets as it adds competition for capital. All these borrowers going to market at same time forces a capital liquidity squeeze.

We discussed algo market manipulation controls. Chat agreed that this has the potential of creating a black swan effect. Chat feels the financing flows are critical to watch more so than a dramatic Saudi announcement.