What Next in the Persian Gulf?

Assuming Iran is indeed behind the attack on Saudi Arabia’s major oil refining facility, it represents a step-increase in Iranian-backed aggression in the region. The Wall Street Journal‘s Spencer Jakab says this attack is “the big one“:

Saturday’s attack on a critical Saudi oil facility will almost certainly rock the world energy market in the short term, but it also carries disturbing long-term implications.

Ever since the dual 1970s oil crises, energy security officials have fretted about a deliberate strike on one of the critical choke points of energy production and transport. Sea lanes such as the Strait of Hormuz usually feature in such speculation. The facility in question at Abqaiq is perhaps more critical and vulnerable. The Wall Street Journal reported that 5.7 million barrels a day of output, or some 5% of world supply, had been taken offline as a result.

Attacks on pipelines—which are easily repaired—and tankers transiting the Strait of Hormuz—which can be effectively defended against—are more a nuisance than a real threat to global oil markets. But as we have seen with this morning’s 10 percent jump in oil prices (except for U.S. crude, whose price is stable—thank you frackers!), the political risk is tangible. A follow-on strike might well see prices jump another 10 percent or more.

The prospect of a wider general war between Gulf states is hard to predict, but it is worth keeping in mind that global economic slowdowns in the past have often come after significant jumps in oil prices. With the European economy looking weak, and the U.S. media trying to talk our own economy into recession so as to defeat you-know-who, one can see yet another reason for Iran to favor destabilizing the region.

One must ask two important questions that I have asked previously: Why does Iran wish to be attacked especially by the United States? And more importantly, if there is a war, who is going to win?

I’m tempted to joke, “Good grief, John Bolton is not gone 72 hours and Iran decides to party with a major attack on Saudi Arabia!” But then there’s this Trump Tweet about the matter, which, note, contains none of the usual typos and idiosyncratic capitalizations and other odd flourishes of most Trump tweets (which makes me think it was “run through channels”):

One reason Iran would like to embroil the U.S. in direct hostilities is that Iran wants to affect the election next year, and an actual shooting war will hurt Trump’s re-election chances.

Then, too, we should ask about the capabilities of Saudi Arabia. We have sold S.A. enormous quantities of weapons over the last 40 years, and, on paper at least, they ought to be perfectly capable of mounting a major military response on their own if they wish. However, it is less clear that they have in fact the operational competence. There is some reason to think S.A. buys weapons in much the same way the oil sheiks buy shiny sports cars—just to have them. I recall stories from the first Gulf War back in 1991 that Saudi troops were mostly just in the way, though I do not know how true these stories are. There is wider reason to wonder whether the Saudi leadership class, which lives in a state of heightened paranoia and fear, has what it takes to manage a serious military conflict, especially if Iran decides to escalate. It’s one think to kill a nuisance journalist in your Turkish embassy; quite another thing to take on Iran directly.

It is possible, in other words, that any Saudi response depends on backup by the United States military. Which puts Trump in a tough spot.

John Kemp, Reuters’ excellent energy correspondent based in London, offers some helpful observations in his daily email (which you can sign up for here):

The attack on Abqaiq is too significant for the United States to ignore. But once started, escalation cycles can be difficult to control (“Strait of Hormuz and the risk of uncontrolled escalation”, Reuters, June 13).

In the face of military reprisals, Iran might feel compelled to respond. Oil facilities and infrastructure in eastern Saudi Arabia as well as shipping in the Gulf would be prime targets that would be difficult to defend.

Under attack from U.S. airpower, Iran’s military commanders might feel compelled to make a rapid decision to “use it or lose it”, hitting back hard before their assets and capabilities are destroyed by air strikes.

In the event of open conflict between a U.S.-Saudi alliance and Iran, oil production and exports could sustain even more serious damage. One option would see the United States try to limit the conflict by attacking non-core Iran-aligned targets in Yemen and Iraq.

Attacking Iran itself would make escalation harder to control, though targets could be selected for their symbolic rather than practical value and carefully circumscribed. The aim would be to create a firebreak in the escalation cycle and try to convince Iran to absorb the attack and not respond or at least limit its response.

Careful target selection could be used to signal the limited nature of the U.S. response and try to avoid further escalation. But it would require exquisite strategic finesse by the White House and the U.S. regional combatant command as well as urgent messaging to Iran’s government and local commanders.

More generally, the United States and Iran appear locked into a cycle of escalating pressure on each other, which neither side appears able to control.

P.S. Oh yeah, with all the drama over Brexit and the Democratic Party’s 2020 clown show, keep in mind that Israel goes to the polls tomorrow to try to break its political deadlock.