Energy Crisis 2019?

By the time you read this, the drone attack on Saudi Arabia’s largest oil facility could be history, a story over and done with. Or it might have mushroomed into a nightmare scenario: a full-blown war, chas v’shalom, with the world quaking and trembling from the terrible attacks that are unfolding.

This story came out of nowhere. True, the Saudis and Iranians had been attacking each other’s interests for years, but that was happening through a proxy war, not directly, and taking place in Yemen. The drone attack was on Saudi Arabia and reportedly was launched from Iran. Initially it knocked out half of the kingdom’s daily oil output and, while much of that has been restored, the attack marked a huge escalation in the conflict.

Will the Saudis play the part of the 98-pound weakling who gets his nose rubbed in the sand, does nothing to retaliate, and walks away humiliated? Or will the kingdom use its vast resources and military to strike back at Iran? The answers to these questions will determine whether peace is at hand and whether the global economy prospers or will be rocked by oil shortages, very high inflation, and deep recession.

There appears to be no middle ground here, as Iran has threatened to launch a full-scale war if either the Saudis or the US retaliates for the attack on the Saudi oilfields – and these days no one takes Iran’s threats lightly.

 

More Than Bluster

Iran has a very aggressive government and can back up its actions. The country is armed to the teeth with nearly every weapon system sold in the world and others they’ve developed.

In June, Iran shot down a $125 million US surveillance drone flying over international waters. A furious President Trump’s initial reaction was to retaliate, but he soon changed his mind.

According to Miguel Miranda, an expert analyst in military technology, “Iran has demonstrated it can launch dozens of mobile short-range ballistic missiles at targets well beyond its borders. It has built a cruise missile with a range exceeding 1,200 miles,” Miranda continued. And it can “mass produce short, medium, and long-range anti-aircraft missiles.”

Moreover, it has reached a level of expertise in drone technology that enabled it to make precision strikes on targets 1,000 miles away. They also have a large inventory and variety of missiles, an assortment of biological and chemical weapons and possibly even nuclear weapons.

Iran’s capabilities shouldn’t be underestimated. In the words of the Wall Street Journal, “U.S. and Saudi military forces and their elaborate air-defense systems failed to detect the launch of airstrikes aimed at Saudi Arabian oil facilities, allowing dozens of drones and missiles to hit their targets, U.S. officials said.”

Iran also has close contact with numerous terrorist groups, who likely would support them if hostilities broke out. Is there still any wonder why the Saudis didn’t respond immediately? Or why Kuwait, the UAE, Egypt, Jordan, Israel, the US and parts of Europe are threatened and intimidated by Iran?

 

Decisions, Decisions

So what will the Saudis do now? One choice is to do nothing, but that’s unlikely because the country’s honor is at stake and because this would be interpreted as a sign of weakness, possibly encouraging additional attacks from Iran.

A second option would be for the Saudis to attack Iran on its own, also unlikely because the Saudi’s military is no match for Iran’s.

Their most likely course would be to join a coalition of nations that launches a retaliatory strike. At a press conference in Saudi Arabia, Secretary of State Mike Pompeo said the Aramco attacks were “an act of war” by Iran; he added, “This is an attack of a scale we’ve not seen before,” which some analysts say brings the crisis “right back to the boiling point.”

The bottom line: All is quiet on the eastern front for the moment, but it may not remain this way for long.

 

No One Knows

There’s another view about the attacks on the Saudi oil fields – and this one is very different. In this version, the Iran-backed Houthis in Yemen were responsible, not Iran, and the true state of affairs are quite different than what we’ve been led to believe.

Specifically:

*The Saudis can’t defend their country.

*The US Navy is not prepared for a sudden increase in fighting. In fact, US carrier groups are not even in the Persian Gulf.

*The Saudis have lost nearly all of their external support, and the coalition against Yemen has all but collapsed.

More shocking still, the Houthis may be in a position to launch an all-out attack from Yemen on Saudi Arabia and destabilize the country. In this scenario, “the Houthis will make a mad dash across the Arabian desert and take control of Mecca and Medina. At the same time there would be a Shiite uprising in the eastern oil section of Saudi Arabia... From every side now the Saudi kingdom is under existential threat.”

Also at risk is the planned ARAMCO IPO, a much-needed $400 billion deal that would enable the Saudis to transition their economy from petroleum-based to an industrial one.

To put this in perspective, the kingdom is not nearly as stable as press reports would have us believe; they need to modernize their economy as quickly as possible, but with the Houthis breathing down their necks they have little time to do that.

Bear in mind that the US and Saudis have been cooperating in the region for decades. So, how would the US respond to an unprovoked and major attack on Saudi Arabia? In this view there is little or nothing the US could do to prop up the Saudi regime.

The idea of Saudi Arabia collapsing was once found only in suspense novels. What happens if the kingdom does fall? Following are possibilities:

*A much, much higher price of oil.

*Iranian influence would soar within and beyond the region.

*Western-leaning oil producers would rethink their positions.

*Moderate Arab states that have ties to Israel would rethink their positions.

*Egypt and Jordan may feel compelled to adopt more hard-line positions.

*The US would lose a great deal of influence in the Middle East.

*Russia and probably China would become much more influential in the area.

*Israel would be even more isolated and, chas v’shalom, more vulnerable to attacks.

Of course, these are just the thoughts of an armchair analyst; what the experts think is what really matters, and we may learn more about that soon enough.

Let’s hope the foregoing scenario plays itself out only in the pages of the latest suspense thrillers. It’s still possible that war can be averted and that calm will prevail; let’s hope it is.

 

Sources: foxnews.com; wsj.com; yahoofinance.com. zerohedge.com.

 

By Gerald Harris