While Saudi Arabia is genuinely angry with Canada, the central reason that it is freaking out at Ottawa is domestic in nature. Namely, Saudi crown prince and de facto Saudi leader Mohammed bin Salman wants to show his domestic critics and skeptics that he will destroy challengers to his rule.
On paper, things look different. The current Saudi suspensions of trade and diplomacy with Canada and a growing Saudi anti-Canadian messaging effort make it seem like Saudi anger is simply about Canadian behavior. Riyadh blames the Canadian government's call on Riyadh to release two feminist activists, Samar Badawi and Nassima al-Sadah.
The reality is different. What's actually going on here is that Mohammed bin Salman is deliberately overreacting against the Canadians in order to signal to Saudis that he will bear any costs to see his reform program completed on his schedule. That consideration of "schedule" is just as important here as the reforms bin Salman is introducing. And the young prince's reform program is immensely controversial. Abandoning the longstanding Saudi economic model of oil-based patronage and restricting the formerly immense power of the Wahhabi clerics, the 32-year-old bin Salman is turning his nation into a semi-liberalized and economically diversified nation-state in vein of the United Arab Emirates.
These reforms are absolutely crucial for Saudi Arabia's long-term stability and the greater opportunity and rights of its citizenry. Yet, they also represent an existential challenge to the old order. The clerics are losing their influence over both Saudi leaders and the polity, and those who have long tapped Saudi oil wealth to enrich themselves are losing their money geyser.
In turn, Mohammed bin Salman faces growing threats to his rule. And that's why bin Salman is taking such a harsh stance towards Canada. He wants those at home who might be tempted to oppose him to think, "Wow, if the crown prince is willing to take on such a close U.S. ally as Canada, he won't hesitate to crush any opposition that I might offer."
That said, challenging Canada's liberal government also makes for a particularly good Saudi whipping horse in that it appeals to the domestic narrative of the House of Saud dynasty as a powerful, determined monarchy. It also not-so-subtly plays to the narrative of heroic, puritanical resistance against Western secularism.
Of course, from the U.S. perspective, the Saudi reaction here is excessive. Benefiting from his close relationship with the Saudis, President Trump should now pick up the phone and ask bin Salman to cool off. If bin Salman refuses, Trump should warn him about the risk of losing his friendship and becoming a new Qatar. I suspect bin Salman will listen. He's made his point to the Canadians, and Saudi Arabians have diligently paid notice.