On Sunday March 7, Yemen’s Houthi rebels attacked an Aramco oil facility in Ras Tanura, a major port on Saudi Arabia’s Persian Gulf Coast. Brigadier General. Yahya Sarea, a spokesman for the rebel group, said in a televised statement that ballistic missiles and drones hit the oil facility and one of its largest refineries, along with military positions in nearby Dammam. Sarea said the attack was part of the Houthis’ “natural right” as a response to the “aggression and total siege of our dear country” by the Saudis.
An unnamed Energy Ministry official later confirmed the attack on Saudi state media, saying one petroleum tank farm was attacked on Sunday morning. According to the official, despite shrapnel falling from a ballistic missile near Aramco’s residential area in Dhahran, there were no casualties or loss of property. The statement called the attacks a “flagrant violation of all international laws and norms” and added that the attack may impact “the security of petroleum exports, the freedom of global trade, [and] maritime traffic, as well as exposing the coasts and territorial waters to major environmental disasters”.
This is the latest in a string of the Iran-directed and inspired Houthi attacks against the Kingdom of Saudi Arabia. On March 4, just three days prior, Saudi Arabia was subject to several missile attacks, with Houthis claiming they had managed to hit Aramco oil facilities in Jeddah. But over the past two years there have been many more damaging assaults.
In August of 2019 missiles fired from drones caused a fire at Aramco’s Shaybah oil field, and later that month Houthi rebels fired 10 ballistic missiles at Jizan Airport in southwest Saudi Arabia, resulting in dozens of deaths and injuries. In June of 2020 a drone and missile attack was launched on King Khalid Airport and the Defense Ministry headquarters in Saudi Arabia’s capital of Riyadh. Jeddah suffered a missile attack in November 2020 just days after the Kingdom hosted the G20.
The most brazen of the attacks was a coordinated strike on Saudi oil infrastructure in Abqaiq-Khurais in 2019, causing significant damage and shutting down some 6% of global oil production. It took 10 days for Aramco to repair the damage. The sophistication of the assault implies that Iran was deeply involved in the planning and execution of the incident.
The current attack on Ras Tanura, one of the largest oil processing facilities in the world (handling some 5 million barrels of oil per day), will likely have a significant security and economic impact. After the assault on Abqaiq-Khurais there was a brief increase in oil prices, but efforts by the Saudi and United States authorities ultimately stabilized markets shortly thereafter.
Despite being second to the United States in total oil production, Saudi Arabia is still the ‘market maker’ for global oil as it exports most of its production, and the government can direct Aramco’s output by fiat. Today the Kingdom pumps out nearly 10 million barrels a day and exports most of it. Oil sales account for 70% of government revenue and half of the country’s GDP.
The attack will likely push oil prices above $70 per barrel, which would impact Covid recovery efforts, as low oil prices have acted as a de facto consumer stimulus through 2020. This may have an effect on relations between the Biden administration and the rebel group: the Houthis were designated as a foreign terrorist organization by the Trump administration, but last month the Biden administration notified Congress it planned to reverse the designation, in order to improve the ability of aid groups to reach Houthi-controlled areas. This latest attack may delay that.
Ras Tanura is likely Iran’s way of testing the Biden administration through proxy attacks. Tehran is emboldened by what they perceive as deteriorating ties between the U.S. and KSA including the report on Prince Mohammed bin Salman’s involvement in the assassination of Jamal Khashoggi, along with the Biden administration’s decision to temporarily freeze arm sales to Saudi Arabia. As part of a reviewal of Trump policy, weapons sales have been stopped while the Biden administration reviews weapons transactions approved by its predecessor. While this isn’t unusual, and many of the transactions will likely be approved, President Biden will likely seek to fulfill his promise to end U.S. support for the Saudi-led war in Yemen, where the Saudis are in conflict with the Iranian-backed Houthis, along with preventing American weapons from being used to further military campaigns there.
It will be important to provide a firm but measured response; creating a pathway to negotiations while also deterring further Houthi attacks. Such a response should be designed to incentivize the Houthis to abandon their Iranian patronage, cease all military operations against Saudi Arabia, and start negotiations with their Yemeni counterparts.
The U.S. should impose personal sanctions on Houthi leaders involved in authorizing, commanding and directing the latest attacks against civilian targets in Saudi. The U.S. should examine if international law was broken, as civilian and industrial targets are protected.
The Biden Administration should be prepared to open the Strategic Petroleum Reserve to keep oil prices in a reasonable range if necessary. This is what the SPR was designed for, and presidentially-directed emergency drawdowns were used to great effect in 2011, 2005, and 1991.
Finally, the Administration should finish the review of the arms sales to Saudi and restart the sales, prioritizing missile defense systems and other related equipment.
Iran is testing the Biden Administration and the U.S. resolve to stand by its allies. While the relations between Washington and Riyadh are tumultuous at the moment, it is worth remembering that the Kingdom is pivotal to the functioning of global oil markets and international prosperity. Even more important is Washington’s reliability as the ultimate provider of security to its allies. Iran needs to be put on notice in both regards.
Source » forbes