In the past week, Houthi rebels attacked oil processing factories at Abqaiq and the Khurai oil fields in Saudi Arabia, one of the largest importers of oil in the world. But despite the visage of simple Yemeni rebels bombing the oil fields, evidence and context say otherwise. This is simply another iteration of the proxy war that the U.S.-backed Saudi Arabia and the Iranians have been fighting for years on end. Fueled by Islamic sectarian tensions between the Shi’a Iranians and the Sunni Saudi Arabians, this is the latest of several provocations by the Iranians. This time though, with the escalating tensions between the U.S. and Iran, the immediate and long-term actions and consequences that come out of these events may well give us an indication that either country may have towards each other.
Firstly, although Iran has denied claims of instigating these attacks, there is enough proof to convict them of such, directly and indirectly, through the Houthis. For years on end, Iran and other terror organizations such as Hezbollah have strongly backed the Houthi rebels of Yemen against the Saudis. So, even if the Houthi rebels may have been the ones who did the lion’s share of the attacks, it is fairly likely that Iran had a part to play in it. The context also makes sense, in that by doing instigating this attack, Iran would kill two birds with one stone: (1) provoking the United States (towards whom Iran has always held a mutual dislike for), and (2) knocking the Saudi oil industry down a peg, among other religious and geopolitical reasons to attack them. The final nail in the stake is that U.S. satellites detected the Iranians preparing a portion of the drones strikes from Iranian soil. Normally, claims of bias from U.S. intelligence may be a legitimate concern, but other sources from Iraq have claimed that the other portion of the drones were prepared by Iranians on Iraqi soil, corroborated by Kuwaiti sources. That Iran did these strikes has many consequences, short-term and long-term.
The largest and most noticeable short-term effect of this attack is the impact on the global oil market. Currently, Saudi Arabia is home to the second-largest proven oil reserves in the world and constitute 12% of the world’s total production of oil. By attacking Abqaiq and Khurai, the Iranians temporarily restricted Saudi oil production from 9.8 million barrels to just 4.1 million barrels/day. This resulted in a loss of 5% of the global production of oil. While the Abqaiq facility has been repairing rather quickly, the effects of the temporary losses of oil were certainly noted. The price of oil in the last week spiked massively (the largest in 30 years), and Saudi Arabia faced losses in the stock market. While the prices will stabilize soon enough, this event realizes one of the largest fears in the Middle East. If war were ever to break out in the area, the oil prices around the world would surge, given that most of the major oil producers are in the Middle East, including Saudi Arabia. This leads to the effect of the long-term consequences of these drone strikes: potential war.
It is no secret that the United States is closely allied with Saudi Arabia, and both of their interests align against Iran. Conversely, Iran has only ratcheted up tensions in the last few years, all the while increasingly becoming more and more nuclear ready. Unfortunately, with the advent of these drone strikes, the tensions seem one step closer to boiling over. Iran has warned the U.S. that if they retaliate over in response to the drone attacks, that they will conduct an “all out war” in the Middle East. Given Iran has made their intentions clear, the onus is now on the United States to see what they will do.
As it is though, it is lucky that America’s president is not Bush, but rather Trump. Unlike President Bush, President Trump has campaigned on isolationism and bringing troops back from the Middle East, and he has generally made good on those promises. With that said, there are still doubts about President Trump’s foreign affairs policy, notably with his volatility against China. While it is normally heartwarming that a president cares so much about American interests that he is willing to go into a trade war, it also brings in a prospect of unpredictability that may not be to his or the world’s benefits, especially in a powder keg like the Middle East. President Trump firing John Bolton, a notorious war hawk, in the past few days has dramatically reduced any chances of war, but with the President, there is still an aspect of unpredictability there. And as long as President Trump does not support a war (and even if he does), the Republicans will not pursue one either. Luckily though, there is certainly an incentive for the President not to heavily escalate tensions. Aside from the threat of “all out war” from the Iranians, America certainly does not want to destabilize the global oil market, as it would allow Iran to regain some influence in the oil market, despite American sanctions. Other international figures such as the Chinese foreign ministry and British PM Boris Johnson have also stated that they will not pursue war. So, if America decides to go to war, they will do it all alone. In other words, it is extremely unlikely that the United States will pursue war.
So, what will happen? On the Iranian side, they could certainly close the Strait of Hormuz, which is something that the Iranians have been threatening for a while. Doing so would close a significant military chokepoint, as a third of the world’s liquified natural gas and a quarter of the total global oil consumption passes through that strait. This would have severe consequences on the global oil market. To combat this threat or at the very least, provide a deterrent, President Trump has sent American troops to fortify Saudi Arabia and the Middle East, bringing the total to approximately 70,000 troops stationed in the area. So, as it is, it seems that the whole situation is in a stalemate, which is probably the best situation that anyone could hope for.
This has been a dramatic escalation of what we have seen in the past. This was a number of airborne projectiles, was very sophisticated, coordinated and it had a dramatic impact on the global markets. — Johnathan Hoffman (Pentagon Speaker)
Right now, it seems that war will be avoided. However, these drone strikes have sounded an important warning to the world. While U.S.–Iran Diplomacy is at a stalemate, the tensions and the stakes have only grown higher with the Iranians threatening war. Such a threat certainly will not happen now, but it is not out of the realm of imagination that it will happen in the future. And should the current situation get worse, these drone strikes will no doubt be remembered as a warning or premonition into what could happen in the coming years.