The biggest exporter has let prices plummet—delaying the day when climate concerns, efficiency, and fuel switching break the world’s dependence on crude. ... Naimi and other Saudi leaders have worried for years that climate change and high crude prices will boost energy efficiency, encourage renewables, and accelerate a switch to alternative fuels such as natural gas, especially in the emerging markets that they count on for growth. They see how demand for the commodity that’s created the kingdom’s enormous wealth—and is still abundant beneath the desert sands—may be nearing its peak. This isn’t something the petroleum minister discusses in depth in public, given global concern about carbon emissions and efforts to reduce reliance on fossil fuels. But Naimi acknowledges the trend. “Demand will peak way ahead of supply,” he told reporters in Qatar three years ago. If growth in oil consumption flattens out too soon, the transition could be wrenching for Saudi Arabia, which gets almost half its gross domestic product from oil exports. ... Last week, in a speech in Riyadh, Naimi said Saudi Arabia would stand “firmly and resolutely” with others who oppose any attempt to marginalize oil consumption. “There are those who are trying to reach international agreements to limit the use of fossil fuel, and that will damage the interests of oil producers in the long-term,” he said. ... The peak that has the Saudis more worried is peak demand.

An ancient religious divide is helping fuel a resurgence of conflicts in the Middle East and Muslim countries. Struggles between Sunni and Shia forces have fed a Syrian civil war that threatens to transform the map of the Middle East, spurred violence that is fracturing Iraq, and widened fissures in a number of tense Gulf countries. Growing sectarian clashes have also sparked a revival of transnational jihadi networks that poses a threat beyond the region. ... Islam’s schism, simmering for fourteen centuries, doesn’t explain all the political, economic, and geostrategic factors involved in these conflicts, but it has become one prism through which to understand the underlying tensions. Two countries that compete for the leadership of Islam, Sunni Saudi Arabia and Shia Iran, have used the sectarian divide to further their ambitions. How their rivalry is settled will likely shape the political balance between Sunnis and Shias and the future of the region, especially in Syria, Iraq, Lebanon, Bahrain, and Yemen. ... Shia identity is rooted in victimhood over the killing of Husayn, the Prophet Mohammed’s grandson, in the seventh century, and a long history of marginalization by the Sunni majority.

A journey into one of the most remote and dangerous countries in the world ... Djibouti is a tiny state of citrus-colored shacks and goat-lined boulevards tucked into a barren, volcanic stretch of the Horn of Africa. It sits astride the narrow straits that lead to the Red Sea and the Suez Canal, and is home to the U.S.'s only permanent military base in Africa, Camp Lemonnier, linchpin of one of the Obama administration's most secretive and controversial programs: the drone-based campaign of surveillance and assassination against Al Qaeda and its allies in Somalia and Yemen. ... as Yemen has become the latest country in the Middle East to descend into a full-fledged civil war. In March, after Houthi rebels seized control of the government, a coalition of Arab states led by Saudi Arabia, which accuses the Houthis of being supported by its archrival Iran, launched a U.S.-supported campaign of airstrikes and imposed a land, air and sea blockade of the country — which it says is necessary to keep out Iranian weapons. ... Four months of bitter fighting later, the Houthis control even more territory. And the conflict has pushed this already impoverished country to the brink of a massive humanitarian catastrophe, with the aid community warning of an impending famine if the blockade is not lifted. ... Meanwhile, Al Qaeda has taken advantage of the chaos to seize wide swaths of eastern Yemen, including the port city of Mukalla, and has called for new attacks against the U.S. ISIS has gained a foothold and launched car-bomb attacks in the capital. Forced to evacuate its embassy and 125 special-operations advisers, the U.S. found its counterterrorism strategy in shambles, with many of the weapons and equipment it supplied to Yemen reported to be in the hands of militias.

“From the first 12 hours, decisions were issued,” says Prince Mohammed. “In the first 10 days, the entire government was restructured.” He spoke for eight hours over two interviews in Riyadh that provide a rare glimpse of the thinking of a new kind of Middle East potentate—one who tries to emulate Steve Jobs, credits video games with sparking ingenuity, and works 16-hour days in a land with no shortage of sinecures. ... The prince plans an IPO that could sell off “less than 5 percent” of Saudi Aramco, the national oil producer, which will be turned into the world’s biggest industrial conglomerate. The fund will diversify into nonpetroleum assets, hedging the kingdom’s nearly total dependence on oil for revenue.

The goal: neutralize crude oil as an economic weapon and find a way to persuade a hostile kingdom to finance America’s widening deficit with its newfound petrodollar wealth. And according to Parsky, Nixon made clear there was simply no coming back empty-handed. Failure would not only jeopardize America’s financial health but could also give the Soviet Union an opening to make further inroads into the Arab world. ... The basic framework was strikingly simple. The U.S. would buy oil from Saudi Arabia and provide the kingdom military aid and equipment. In return, the Saudis would plow billions of their petrodollar revenue back into Treasuries and finance America’s spending. ... The current tally represents just 20 percent of its $587 billion of foreign reserves, well below the two-thirds that central banks typically keep in dollar assets. Some analysts speculate the kingdom may be masking its U.S. debt holdings by accumulating Treasuries through offshore financial centers, which show up in the data of other countries. ... While oil’s collapse has deepened concern that Saudi Arabia will need to liquidate its Treasuries to raise cash, a more troubling worry has also emerged: the specter of the kingdom using its outsize position in the world’s most important debt market as a political weapon, much as it did with oil in the 1970s.

Last year, three million came for the hajj, a pilgrimage in the last month of the Islamic lunar calendar that is considered obligatory for every Muslim who can afford it; five million more came for the umrah, a minor pilgrimage that can be made for much of the year. And millions of Saudi citizens routinely pass through Mecca’s sacred sites as tourists. ... It is a transformation that has been underway since the late 1970s, when the wealth generated by the oil boom led Saudi monarchs to devise an ambitious plan to replace earlier Ottoman structures and to expand the Grand Mosque and its surroundings with Arab-style architecture. At a projected cost of $26.6 billion, the Saudi Binladen Group has led the efforts to increase the capacity of the Grand Mosque ... Throughout the history of Islam, no other ruler built in such proximity to the Kaaba; certainly none built anything to dwarf it. In luxury hotels like the Fairmont Makkah Clock Royal Tower and the Raffles Makkah Palace, views of the holiest site of Islam are marketed as the “Haram view” and “Kaaba view,” and a standard room can run anywhere from $1,500 to $2,700 a night during the hajj.

The world is about to experience the greatest geopolitical transformation in at least the past three generations. The United States’ need for oil has greatly diminished, and its goals in the Middle East have changed. The United States now views the world wholly in relation to its other interests. Global and local demographics, new outsiders in the area, and a new contest shaping up between Iran and Saudi Arabia contribute to continuing instability in the Middle East. A global energy crisis could soon draw many countries into the Middle East, and a simultaneous political crisis could erode state authorities there, unleashing a new wave of violence and terrorism. ... The United States is transforming into a country with global reach but no global interests. For the 4 billion people on this planet who are utterly dependent on global trade for their well-being, this transformation is possibly the worst outcome imaginable. ... Even if the United States was convinced that its economic and physical security required international engagement, it is about to step out to lunch, and it is going to be a very, very long lunch. Just as the rest of the world needs the United States, it is leaving the building.