The Encirclement of Saudi Oil Production by Iran

Tankers load oil in the northern Persian Gulf in 2004. (U.S. Navy/ Richard J. Brunson)

by Jean-François Seznec

The latest attacks on the Arab Gulf oil industry seems to be part of a strategy by Iran to warn the Gulf states that it can block all oil shipments, if it sees fit.

Saturday’s extensive destruction of the Abqaiq oil processing plant passes the message that Iran has superior precision weapons that can wreak havoc on Saudi oil production. However, the message is perhaps even more dire. A few weeks ago, Iran (allegedly) mined three tankers at anchor off Fujairah in the Gulf of Oman. To make sure they meet their deadlines while keeping their tankers out of the Persian Gulf in case of sudden conflict, shipping firms anchor the tankers a few kilometers from Fujairah, within 24 hours of Gulf loading harbors. Now, of course, all oil producers, shippers, and “blue water navies’ know that Fujairah and the Gulf of Oman is not the safe haven they thought it was, and they have reason to believe that the 1.5 million b/d pipeline bypass from Abu Dhabi to Fujairah is likewise at risk. The mining of ships in Fujairah increases shipping costs and throws off base U.S. efforts to protect Gulf shipping. It shows in particular that aircraft carriers and accompanying fleets are susceptible to Iranian operations, even if some miles out of the Strait of Hormuz.

An attack in May on the East-West trans-Saudi pipeline, which has the capacity to ship 5 million b/d to Yanbu on the Red Sea coast, sent a similar message. If precision weapons can destroy pumping stations and processing plants, the bypass to the Red Sea will not be fully useable. Thus the Iranians are showing the Saudis that they can severely perturb all Saudi oil exports.

The attacks against the Saudi Aramco facilities in Abqaiq took place exactly one week after major changes in Saudi oil management. Saudi Aramco has a new chairman, Yasir al-Rumayyan, a financier non-engineer known for his non-oil investments. The highly respected former minister of energy, Khalid al-Falih, has been replaced by Crown Prince Mohammad bin Salman’s brother, Abdulaziz bin Salman, who is a well-known figure but has less charisma than his commoner predecessor and less credibility to oppose the crown prince’s policies. The attacks come at a time when Saudi oil policy is in transition, certainly taking the kingdom’s leadership off-guard. If the changes in the kingdom’s oil leadership did not deter potential investors from the widely anticipated Saudi Aramco IPO, certainly the Abqaiq incident will.

Presently, not only is Saudi Arabia surrounded militarily by Iran in Syria, Iraq and Yemen, but its main source of wealth is under assault. Iran is creating just enough havoc to humiliate Saudi Arabia, but has not yet pushed oil prices to $100/b, which could force the U.S. to retaliate.

The Saudis are in an existential battle with Iran, but they are in a difficult spot. If they don’t retaliate, they will invite many more attacks. However, they can only retaliate if the U.S. provides them with full military support and this is a time when the kingdom has the worst possible reputation in Washington and few U.S. leaders will want to risk military lives in the defense of Saudi Arabia and, in particular, of its Crown Prince.

Iran is well aware of the nature of the leadership in Washington, which they see as speaking loudly, but carrying a very small stick. The Iranians also view Mohammad bin Salman as having been weakened in the U.S. and Europe. Iran can be expected to continue and intensify its attacks against both U.S. and Saudi interests. Of course, this would be a dangerous course for them to take, the U.S. and Saudi leadership could eventually decide to retaliate and thereby open the door to war and massive destruction.

Jean-François Seznec is a political scientist specializing in business and finance in the Middle East. He is currently an adjunct professor in the School of Advanced International Studies (SAIS) at the Johns Hopkins University, and at Georgetown University’s McDonough School of Business and Edmund A. Walsh School of Foreign Service, in Washington, D.C.

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  1. So you support the Ayatollahs. Fine, but refer to them as Ayatollah regime. Don’t bring Iran into it. Iran is under occupation.

    The desperate ones are the Ayatollah regime. They are cash strapped. Their only buyer is China, who is about to abandon them.

    Oil price has not gone up like crazy. In fact it came off big time today after the Saudis said everything was fine.

    If you want to be against US or Saudi Arabia, fine. But don’t twist the truth on the Ayatollahs. The only reason they are around, is that everyone in Iran is secular and non-violent.

    If Iranian culture was based on vengeance, the Ayatollahs would have been removed by force a long time ago. But then Ahuramazda would not be pleased. We are Noble people. That is what Iran means.

  2. Why must the Saudis be in an existential battle with Iran? They have all coexisted in various forms for centuries, although the history of the region goes back thousands of years and has indeed quite consistently been violent.
    Lets remember. The proxy game is a sword that cuts whoever’s hand directs it.
    From Baluchistan to Kurdistan, Iran is a melting pot of minorities who indeed would prefer not to have to fight with Tehran for their basic rights but as the previous comment notes, will not abide under the political rule of the Mullahs forever.
    Nobody should be surprised by recent events. Iran made it clear if they do not export oil, nobody else will. They Can enforce that, no matter the cost. But why force that confrontation, Mr. Trump? Oh he has figured that one out now? Or not…

  3. Iran did this, Iran did that, and this is what it means…but there’s no evidence that Iran did anything, so there is no basis to this article which assumes that Iran did these things. In fact, it is the US that is assaulting Iran so why blame the victim.

  4. The United States should realise that there is a very little room for diplomacy when it comes to an intense power struggle that involves too many players, and in that little room one major player has to encounter the acrimonious reality: that the region’s people and their forces are and will remain legitimate owners, regardless of how powerful are their adversaries.

    Israel and the US learned a historic lesson on October 23, 1983. Reagan was smart enough to accept the historic fact. On February 7 1984 he withdrew his American forces and left Lebanon to its legitimate residents to solve their own problems, so did the other occupiers, the British and the French. Had the US-backed Zionists not savagely occupied Palestine and then with the US blessing not invaded the sovereign Lebanon on June 6, 1982, the US policy makers and foreign forces would not have had an excuse to station their non-Muslim forces there to meddle to dominate and alienate the Muslims.

    But suffering from historical amnesia and under the thumb of the Zionists, the US keeps returning to the slaughterhouses of the Muslim World especially the Middle East where it has no moral authority or legal rights to militarily dominate and threaten the Muslim region.

    Will Mr Trump learn to leave and mind his own business and his own people at home?!

    The message has been loud and clear: Dear America, you have no moral or legal rights and no business to be in our region. You have been here for too long; meddled too long and left millions of our fellow Muslims dead and wounded and millions traumatised now dying from cancer caused by your ruthless bombings; you caused mayhem, carnage and unprecedented ecological disasters so that you could meddle more, sell more American guns and daggers; you did and made huge profits at the expense of our lives, our women and children! Now please leave!

    Please leave our region, Mr Trump; because it is the right time to leave, indeed you should have left years ago, now long overdue! Please leave! Leave before it is too late; before millions more Muslim women, children and elderly are dead and wounded! Just leave! Leave! For the love of God leave!

  5. One wonders whether Seznec is getting paid enough by his masters to write such amateur propaganda for the Saudis. Quite laughable that he concludes Saudi Arabia is “surrounded” hence portraying as the victim the chief recruiter and financier of ISIS, Al-Nusrah, Al-Qaida, and other head-choppers terrorizing Syria, Libya, Iraq, and elsewhere in the Mideast for the past 10 years, not to mention its direct though covered-up involvement in 9-11 years earlier. If anybody has been surrounded AND/Or invaded with genocidal powers, it has been Yemen, Syria, Iraq, or Iran variably for over the last two or more decades. And this fool pseudo academic (who can’t do better than being adjunct in a den of a right wing think thank, thinks he can just lie and deceive by writing a few poorly argued sentences, as dumb as a box of hair, totally without any presented evidence, and fool the audience here. He should try Fox or some other more mainstream channel to sell his BS.

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