- The recent attacks on oil infrastructure in Saudi Arabia and the UAE illustrate the vulnerability of the regional oil and gas industry to disruption.
- Houthi rebels, with Iranian support and possible direction, are likely to continue and potentially intensify attacks on energy infrastructure and population centres in Saudi Arabia. The risk of further attacks against the UAE and its interests cannot be discounted.
- Iran and its rivals appear intent on avoiding conflict, but the lack of communication and heightened hostilities heightens the likelihood of a miscalculation.
- If an attack by Iran or its proxies succeeds in causing mass casualties or significant economic disruption, it would likely set off an unpredictable chain of events that could manifest in a direct confrontation.
On 12 May, four oil tankers were damaged in coordinated attacks at Fujairah anchorage off the UAE. No injuries were reported. The exact method of attack has not been confirmed but initial reports have indicated explosives, possibly delivered by drones or vessels, were used to sabotage the tankers. No group claimed the attack, but Iran was suspected.
Saudi Arabia confirmed that the al-Duadmi and Afif pumping stations, around 200 and 400 km west of Riyadh respectively, were struck by explosive-laden unmanned aerial vehicles (UAV) early on 14 May. Iran-aligned Houthi rebels based in Yemen claimed responsibility for the attack, which forced the closure of the East-West Pipeline for two days.
The recent attacks on oil infrastructure in Saudi Arabia and off the UAE are likely connected to regional tensions with Iran. The events coincide with increasing US pressure on Iran in the form of sanctions and regional military deployments that Washington has said are intended to counter Tehran. The alleged Iranian aggressive activities are reportedly a response to intensified US pressure over the last two months, according to unnamed US intelligence sources cited in press reports.
The recent attacks appear intended to demonstrate the vulnerability of regional oil exports to disruption by Iran and its allies. Notably, the recent attacks targeted both a key pipeline in Saudi Arabia and an export terminal off the UAE that could offer alternative export routes should Iran follow through on its repeated threats to block the strategic Strait of Hormuz. Nearly a third of all seaborne-traded oil passed through the waterway in 2016, highlighting its significance to world oil markets.
Further attacks likely as tensions persist
Iran and its proxies are likely to stage further attacks on the oil sector as pressure on Iran’s economy intensifies. US sanctions have already cut Iran’s oil exports by 1.5 mn barrels since May 2018 and Washington has said it hopes to eventually cut off Iranian oil exports entirely. The latest events are an indication that the Houthis plan to intensify their efforts to disrupt Saudi oil exports, likely with Iranian support or direction. The Houthis had not previously demonstrated a capability to use UAVs to hit targets so deep in Saudi territory.
This could manifest in more UAV and missile attacks on hydrocarbons infrastructure in Saudi Arabia in the coming weeks. Renewed attacks on commercial shipping off Yemen and further attacks on vessels off the UAE could also materialise. Iran also has advanced offensive cyber-capabilities and has been linked to previous cyber-attacks targeting Saudi Arabia’s energy sector as well as US international oil companies. Further cyber-attacks, which could be difficult to attribute, provide Iran an attractive and low-cost option to sabotage its rivals.
Both the US and Iran have signalled they do not want a conflict, but a de-escalation of the current tensions is unlikely. The UAE has said it will show restraint after the recent attacks off Fujairah, but pressure for retaliation will grow if attacks continue or cause significant damage or disruption. The heightened military posture on all sides and the absence of diplomatic efforts to contain the tensions make the situation more volatile, increasing the likelihood of an unintended military escalation. Reflecting this, the Wall Street Journal reported US intelligence showed Iran’s leaders believed the US was planning to attack them, prompting Iran to prepare for possible counterattacks.
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