It’s almost a whole year since the House of Saud shocked the world by announcing its scheme to let market forces determine oil prices. It then did the unthinkable: it cranked up oil production.

What followed was arguably the biggest price war of this fledgling century, as the price of oil fell by more than 50% in six months.

Suicide Economics

For struggling energy consumer nations, the collapse of the oil price has been a godsend; for producer nations, it has been a source of incalculable economic pain and misery. When the Saudis had their all-in moment, it was widely assumed that Russia, as well as a host of other unsavory oil-dependent “regimes” (such as Venezuela), would be first to buckle.

Eleven months on, Venezuela’s economic edifice is in tatters, Russia has lost billions of dollars in crude revenues, and the U.S. shale industry — broadly assumed to be the Saudis’ second target — is being kept alive only by increasingly difficult-to-come-by and expensive infusions of debt.

Yet despite all the balance sheet carnage, the Saudis have not won their oil price war. Not yet. Indeed, as prices continue to bite, it is the Saudi economy that is beginning to feel the pain, especially with an aggregate deficit for 2015 to 2017 forecast to exceed $300 billion.

The effects are now ricocheting around the economy, hitting businesses in Saudi Arabia and beyond. Here’s more from Bloomberg:

"Saudi Arabia is delaying payments to government contractors as the slump in oil prices pushes the country into a deficit for the first time since 2009, according to three people with knowledge of the matter. Companies working on infrastructure projects have been waiting for six months or more for payments as the government seeks to preserve cash, the people said, asking not to be identified because the information is private. Delays have increased this year and the government has also been seeking to cut prices on contracts, the people said."

The House of Saud is responding to the decline in crude, which accounts for about 80% of the country’s revenue, by tapping foreign reserves, now at their lowest point since early 2013, as well as cutting spending, selling bonds and delaying projects. This could be bad news for many Western construction and infrastructure companies, for whom the oil-rich kingdom has been a prolific source of profits and revenues.

And now, according to Bloomberg, Saudi Arabia has slowed down disbursing money, and they find themselves waiting six months for invoices to be paid.

A Desert Nightmare for Spain, Inc

Particularly vulnerable are Spanish construction companies. They have carved out a bountiful niche market on the Arabian peninsula, thanks largely to the tireless diplomatic efforts of the former King of Spain Juan Carlos II, who abdicated last year.

For decades Juan Carlos served as an exemplary account manager for Spain Inc., enriching Spanish corporations, in particular arms manufacturers, by leveraging his close links to authoritarian rulers in the Middle East and North Africa. In the process he is alleged (by the New York Times, among other publications) to have amassed billions of dollars in commissions.

Spain's King Juan Carlos. Thomson Reuters

The King’s relations with the House of Saud are especially strong. One week before announcing his intention to abdicate last year, he was in Saudi Arabia to promote “Spanish business interests” — in particular the involvement of Spanish firms in the construction of a high-speed rail line between Riyadh and Mecca worth over $9 billion.

That high-speed rail line could now be in danger. According to El Economista, it’s still not clear whether Saudi cutbacks will affect the rail line. If they do, it will do serious harm to the accounts of two Spanish rail companies, RENFE and Adif, as well as the construction giant OHL, which is already drowning in debt and is mired in a massive legal case in Mexico [read: Spanish Construction Giant Reels From Mexican Hangover].

In a desperate bid to stem its liquidity problems, the company has just completed a €1-billion capital increase. Predictably, shares have not reacted kindly, having lost 40% of their value since Oct. 7. They are down 70% since their annual peak of €24 in February.

Already teetering

The Spanish company that is probably most exposed to Saudi cutbacks is Fomento de Construcciones y Contratas (FCC), a company whose biggest shareholder is the world’s fourth richest man, Carlos Slim — a man who is already having a torrid 2015.

FCC is part of a consortium to build the Riyadh metro, a massive project estimated to be worth some $22 billion. That figure could drop precipitously as Saudi authorities try to tighten spending.

This could be a serious problem for a company that has already restructured the terms of its debt once in the past 18 months and recently tried (unsuccessfully) to convince its biggest lenders to restructure a further €4.5 billion.

The company is also set to undergo another adjustment program, with yet more layoffs for its 55,000-strong global workforce. There are even rumors of a further capital increase.

In other words, more pain for the company’s shareholders who have already seen dividends disappear and shares plunge from €11.8 at the beginning of the year to just over €7 today.

Now Saudi Arabia, one of the company’s biggest cash cows, just got sick. Not that Saudi Arabia is likely to have much difficulty paying its bills — not with a gross debt-to-GDP ratio of less than 2% in 2014 and net foreign reserves of over $650 billion. But market conditions are deteriorating fast as oil inventories build up and liquidity runs dry.

Now the Kingdom’s rulers must do something they haven’t had to do for a very long time — cut down on certain non-essentials.

And with those unlikely to include the public handouts the government uses to maintain social order and the billions it spends on U.S. or British weapon systems, massive infrastructure projects are suddenly attracting the attention of zealous cost cutters. And that could be very bad news for some of Spain’s over-indebted, liquidity-challenged construction giants. By Don Quijones, Raging Bull-Shit .

Spain’s economy is back on track — that’s the narrative peddled by the Rajoy government to win December’s do-or-die elections. It will do “whatever it takes” to keep the narrative intact. But not everybody’s buying it.