GP Insights # 150, 21 September 2019
On 14 September 2019, a drone attacked Saudi Aramco Oil facilities in Abqaiq and Khurais, in eastern Saudi Arabia. Houthi rebels in Yemen claimed the attack. Over the week, the recovered debris of the missile was displayed at a conference, on 18 September which appeared similar to Iran's Quds-1 missile.
What is the background?
Saudi Aramco is the world's biggest oil company. The attack on key facilities at Abqaiq and Khurais reduced the global crude production by 5 per cent and has also raised tensions in the neighbourhood. In a press briefing, the Saudis said, the attack was perpetrated from the north or north-west border. The attack was carried out with 18 drones and seven cruise missiles. Four cruise missiles struck in Khurais oilfield and three fell in Abqaiq. The attack impacted 17 points at two sites.
Saudi Aramco is installed with state-of-the-art missile defence system; however, it could not prevent the attack. The Patriot, US-designed surface-to-air missiles to shoot high-flying targets, and the German Skyguard, could not track the drones, as the latter flew at a low altitude.
The Houthi rebels have been fighting with Saudi Arabia since March 2015. Houthis receive support from Iran, had also carried out attacks on Saudi from Yemen with drones and missiles, earlier.
The Houthis may not be responsible. Fingers are pointed at Iran.
Iran and Saudi Arabia, the two big powers in the Middle East, are geopolitical rivals and both aim to dominate the region. The US-Iran relations have deteriorated during Trump's presidency and have reached the lowest point since the American hostage crisis. Trump administration believes Iran is directly involved in the attack. Mike Pompeo, Secretary of State called the attack an “act of war”.
What does it mean?
The drone attack on Aramco, the heart of Saudi Arabia's economy, impacted oil prices and global markets. It drew the world’s attention and responses from all the big powers. It has raised concerns as to how the United States will react on it.
These kinds of attacks are far different from conventional war tactics, which may further increase the spending on defence to protect a country's resources and strategic installations. The attack proved that installations in Saudi Arabia with all its sophisticated defence mechanism are not perennially safe.
Trump urged that the US has "many options" in response. In the latest interview, Trump said he has ordered to impose tougher sanctions on Iran. This makes any meeting between President Trump and President Rouhani on the sidelines of the upcoming United Nations General Assembly in New York unlikely.
The attack is likely to make the politics of the Middle East more aggressive and violent, with the US and Saudi Arabia on one side and Iran on the other.