"Nightmare scenario"
The Middle East is always a nightmare scenario.
"A Middle Eastern government analyst, when asked what risk keeps him awake at night, frames the scenario this way:"
If you're a insomniac, don't be a Middle East analyst, or maybe it will cure insomnia out of boredom of having nightmare scenarios constantly. This is also another unnamed source who should be smarter than to worry about idle speculation over a series of events that hasn't happened.
"Iranian-backed Houthi militia in Yemen break a fragile ceasefire..."
There isn't a ceasefire to break. Khasoggi's murder has already happened. If his death could break a ceasefire, it would have been a factor in creating the ceasefire in the first place.
"...However, he lacks the offensive and defensive wherewithal for a sustained war with Iran."
Say want you want about the Saudis, they aren't going to start a war with Iran they can't finish, and they won't start it without U.S. help. They may be desperate enough to ask Israelis for help. I'd expect them to double cross Israel right after its over, but they might ask.
The Houthi rebels are not going to break a nonexistent cease fire at the behest of Iran. The Iranian economy is on the brink, and hitting a half dozen refineries means Iran doesn't have a economy anymore. Iran can not survive a conflict right now either.
So we now have a "post-Khashoggi world" in the Middle East? We will be at the brink of war - in a few months - over a ceasefire that hasn't happened, over a journalist's murder?
These think tank types have a really high opinion of their insignificance.
Atlantic Council?
Wikipedia: Atlantic Council
In February 2009, James L. Jones, then-chairman of the Atlantic Council, stepped down in order to serve as President Obama’s new National Security Advisor and was succeeded by Senator Chuck Hagel. In addition, other Council members also left to serve the administration: Susan Rice as ambassador to the UN, Richard Holbrooke as the Special Representative to Afghanistan and Pakistan, General Eric K. Shinseki as the Secretary of Veterans Affairs, and Anne-Marie Slaughter as Director of Policy Planning at the State Department. Four years later, Hagel stepped down to serve as US Secretary of Defense. Gen. Brent Scowcroft served as interim chairman of the organization’s Board of Directors until January 2014, when former ambassador to China and governor of Utah Jon Huntsman, Jr. was appointed...
Former NATO Secretary General Anders Fogh Rasmussen called the Council a “pre-eminent think tank” with a “longstanding reputation”, and former U.S. Senator Richard Lugar (R-IN) noted that the Council is “held in high esteem within the Atlantic community”...
In 2017, Tom Bossert, previously a Nonresident Zurich Cyber Risk Fellow at the Atlantic Council’s Cyber Security Initiative, was appointed Homeland Security Advisor to the Trump administration...
https://en.wikipedia.org/wiki/Atlantic_Council
Frog, meet Scorpion...