Iran

Saudi Arabia is reportedly planning to stop all flights to and from Iran and banning its citizens from travelling there. The Saudi foreign minister Adel al-Jubeir told Reuters that all commercial ties between the countries would also be cut. The move follows attacks on the Saudi embassy in Iran by protesters angry at the execution of Shia cleric Sheikh Nimr al Nimr. Sunni-led Saudi Arabia claims that the execution was part of a war on terrorism.

Nations allied to Saudi Arabia have joined diplomatic action against Iran, amid a row over the Saudi execution of Shia Muslim cleric Nimr al-Nimr. Bahrain and Sudan have both followed Saudi Arabia and cut diplomatic relations with Iran. Bahrain has demanded that Iranian diplomats leave the country within 48 hours. The UAE has downgraded its diplomatic team and announced it is planning to cut the number of Iranian diplomats it allows to be in the country. The BBC reports: Saudi Arabia on Sunday gave Iranian diplomats two days to leave after an attack on its embassy in Tehran.

Over the weekend, a geopolitical black swan landed in the Mid-East where Saudi Arabia’s execution of a prominent Shiite cleric set in motion a series of events that led Riyadh to sever diplomatic ties with Tehran.

Protests broke out almost immediately after news of Sheikh Nimr al-Nimr’s death hit the wires. Tensions reached a boiling point on Saturday evening in Tehran where demonstrators torched the Saudi embassy. In Bahrain, angry Shiites burned tires and confronted riot police who used tear gas to disperse the crowds.

It all started off relatively well: oil and US equity futures were buoyant on hopes Iran and Saudi Arabia would break out in a bloody conflict any minute boosting the net worth of shareholders of the military industrial complex, and then, out of nowhere, like a depressed China in a bull shop, the "mainland" crashed the party following a terrible manufacturing PMI report, which sent Chinese stocks sliding slowly at first, then very fast.

A Middle East expert has warned that the conflict between Iran and Saudi Arabia may lead to a larger holy war in the Middle East, escalating to World War 3.  Russian Middle East expert Vladimir Ahmedov says that following the Saudi execution of Iran’s prominent Shia cleric Nimr al-Nimr, and with Iran’s Supreme Leader promising “divine vengeance” against the Saudi regime, a war between the Sunnis and Shiites could happen.