The middle east has always been and will always be a fracture point, due most recently to its importance to the global economy through its oil trade. The sanctions on Iran’s oil trade placed by the US have crippled its economy, causing an escalation of tension in the region. This came to a head in the recent attacks on the Saudi Arabian Abqaiq oil plant. A swarm of drones and guided cruise missiles targeted and damaged the plant, located in the Eastern Province of Saudi Arabia. This plant is one of the most important structures in the middle east, in terms of strategic importance in the oil trade, second only to the Strait of Hormuz (where the Briish oil tanker was seized by Iran in May). In fact, with the reduced Iranian imports due to sanctions, products from Abqaiq now account for a third of the traffic through Hormuz. The attacks have been officially claimed by the Yemeni Houthi rebels, but although the Saudis, US and majority of Western countries have pointed the finger at Iran.
Given the importance of Abqaiq, it is unsurprising that the immediate effects of the attack have been drastic. On Monday 16th of September, following the attacks at the weekend, the oil market experienced the greatest one day spike in oil price since the 1991 Gulf War. Saudi oil production has reportedly dropped by 50%, with a loss of 5 million barrels per day. Although the oil markets have previously been affected by natural disasters and wars, never has a single malevolent, targeted attack caused such an effect on global markets, making this not only a political but economic crisis. Given the political tensions in the region, particularly those between the US and Iran, a loud international response was to be expected.
The first response from the West was to put the blame on to Iran, despite the official claim by the Houthi rebels. The Houthi faction is largely funded and equipped by Iran in the Yemen war, viewed as the proxies of the Iranians against the Saudis. Following a meeting, Boris Johnson, Angela Merkel and Emmanuel Macron issued a statement stating that ‘It is clear to us that Iran bears responsibility for this attack. There is no other plausible explanation. We support ongoing investigations to establish further details.’ The evidence for the attack being Iranian is largely that the weapons used were more sophisticated than those seen before in Houthi attacks. UN investigations are ongoing to collect weapon fragments and identify their source. However, while these investigations continue, all eyes have been on the US response, with Trump as the main player, given his withdrawal from the nuclear deal, which has escalated tensions over the past two years. Trump’s response has come in typical Trump fashion, with initial tweets being dialed back on in the following week. In his initial response, Trump tweeted that the US was ‘locked and loaded’, and his Secretary of State Mike Pompeo branded the attacks as ‘an act of war’. These initial comments pointed to a military response, however, shortly after this was dispelled, with Pompeo stating that Washington and its allies were to seek a ‘peaceful resolution’, and an official Pentagon statement called for the US to ‘deter conflict and get back on the diplomatic path’. In fact, despite the initial decisive blame put on Iran, Pentagon spokesperson Jonathon Hoffman said ‘all indications are that Iran is in some way responsible, we are not going to get ahead of the Saudi investigation in their assessment of this’, showing a slight shift in the readiness to blame Iran directly and damningly. This dithering and policy U – turn seems to be typical of Trump’s Iran policy, bringing to mind his cancelled air strikes in June.
The question as to what will happen next is a complicated one. In terms of oil, there is a question mark hanging over whether Saudi oil can still be trusted. This is not the first time Abqaiq has been attacked, in 2006 Al-Qaeda targeted the plant and only narrowly escaped causing great damage. As it was, Saudi Aramco was able to contain the threat and minimise the damage caused. However, the fact that a security breach of this level was able to happen now raises serious questions about the security of the most important oil plant in Saudi Arabia. In order to smooth an oil market crisis, countries can release their own ‘government controlled strategic stocks’, but they will be reluctant to do so, fearing that the situation may worsen. However, this could lead to a situation of ‘too little too late’. Both the White House and the International Energy Agency have stated that commercial oil stocks are at a high level and that the market can cope. However, any release must be done soon in order to avoid further spikes in oil price that could ripple through the markets. In terms of politics, Trump is gearing up for the 2020 elections and therefore reluctant to start another war in the middle east and be both unpopular and breaking his campaign promises. Undoubtedly, Tehran realises this and has taken the opportunity to pounce while they think Trump cannot respond. Trump bluffed them and they called him on it. However, the conflicting signals and confusion with which Trump has treated his Iran policy could cause a miscalculation from Tehran. So far, the more pressure Trump has placed on them the more risky strategies they have pursued, from seizing a British ship to this most recent oil attack. However, this strategy is a double edged sword for Tehran – while it is true that so far, Trump has not responded with large military force, he still has the power to increase the sanctions placed on Iran, possibly driving them to more and more risky measures, creating a vicious circle. A possible way to diffuse the situation has been suggested by Macron, which would consist of Europe extending a $15bn credit line to Iran, on the condition that Iran agreed to and abided by the terms of the original 2015 nuclear deal. This plan could be successful in that it would allow the US and Iran to save face by de-escalating tension between the countries without direct negotiations between the two, which Iran’s foreign minister, Mohammed Javid Zarif, stated would not happen. Either way, the tensions are unlikely to be resolved soon, and all eyes are on Mr Trump and Tehran, ready to follow their next moves closely.