Last week’s attack on two Saudi oil processing centers had economic consequences that reached far beyond the Middle East.
On September 14, two Saudi oil processing centers were attacked by missiles and a fleet of armed drones. The damage to the facilities brought down Saudi Arabia’s oil production from 9.8 million barrels a day to 5.7 million, which is one of the largest drops the oil market has ever seen.
One possible perpetrator is the Houthi rebels, who claimed responsibility shortly after the attacks. The Houthis are a rebel group from Yemen, which has seen a long and brutal conflict with Saudi Arabia. In 2015, the Saudis began bombing the country, with US backing, and the conflict has continued through the present. It would come as no surprise for the Houthis to be behind the attack.
However, US Secretary of State Mike Pompeo, as well as Saudi government officials, aren’t convinced. They instead blame the attacks on Iran, saying that the Houthis don’t have access to the high-quality weapons needed to carry out such an attack. The Saudi Arabian Defense Ministry even went as far as directly stating that Iran used drones and missiles to conduct the attack.
For decades, Iran and Saudi Arabia have had a very tense relationship. This is partly due to religious differences, as Iran is mostly Shi’a and Saudi Arabia is mostly Sunni. For much of their recent histories, the two countries have also been competing for control over their region. For a long time, Iran has even been accused of backing the Houthis, and some have wondered if both parties were involved in the attack.
Whoever the perpetrator was, they caused massive damage to the Saudi and global oil markets. As of today, Saudi Arabia is the second largest producer of oil worldwide as well as the largest exporter. The two oil processing facilities hit were the two biggest within Saudi Arabia, and one was the biggest in the world. The damage caused one of the greatest spikes in oil prices around the world in about 30 years. To make matters worse, the two plants aren’t expected to get back to their full processing power for up to a few months. So if you find yourself paying a bit more for gas than usual, that could be why.
It seems like Iran, the Houthis, or both are behind this attack. But whoever the perpetrator is, they have shown that their quarrel with Saudi Arabia could have far-reaching consequences that affect the global economy. If these attacks were successful once, they could very well happen again.