The Yemeni rebels’ drone blitz on the “nerve center” of Saudi Arabia’s
oil industry was a devastating counter-offensive which potentially could end
the four-year war in short order. What is even more catastrophic for the Saudi
monarchy – especially the ambitious Crown Prince – is that the Houthi rebels
have wielded the ultimate power to crash the kingdom’s oil economy.
Crown
Prince Mohammed bin Salman (MbS) was the main architect of the disastrous Saudi
war on Yemen. His military hard-man display was meant to consolidate his rise
to power as heir to the Saudi throne. It was a calculation based on the blood
of the Yemeni people. But now the war has gone from a callous game to a
far-more dangerous threat to the House of Saud’s seat of power. If the
Saudi oil economy is put at severe risk, then the lifeline for the monarchy is
liable to be cut.
After
last weekend’s spectacular air strike on the main oil processing plant in Saudi
Arabia – northeast of the capital Riyadh, some 1,000 kms from Yemen – the
Houthi military leadership is warning that more deeply-penetrating aerial
attacks are on the way. The Yemeni rebels have demonstrated that nowhere in
Saudi Arabia is safe.
Saudi
air defenses and their multi-billion-dollar US Patriot anti-missile systems
have been rendered useless against an-ever increasing arsenal of more
sophisticated unmanned aerial vehicles (UAVs) operated out of Yemen. UN experts
reckon that the Houthis’ UAV-X drone has a range of up to 1,500 kms, which
means that all of the Saudi oil infrastructure located in the Eastern Province
near the Persian Gulf is a viable target.
Last
weekend’s air strikes carried out with 10 drones, according to the Houthis,
caused Saudi oil output to shut down by nearly half. The main target – the
Abqaiq refinery – processes some 70 per cent of all Saudi crude destined for
export. It is not clear when the processing plant can be restored to normal
function. It may take weeks or even months. But if the Yemeni rebels can
inflict that extent of damage in one air raid, it is not hard to foresee how
the Saudi oil-dependent economy could conceivably be brought to a crippling
standstill.
“The
only option for the Saudi government is to stop attacking us,” said a Houthi military spokesman
following the drone strikes. The rebels also warned foreign workers in Saudi
Arabia associated with the country’s oil industry to vacate.
The
Yemenis have a gun to the House of Saud’s head. It must give the rebels great
satisfaction to finally have the Saudi monarchy in their cross-hairs after four
years of Yemen suffering relentless aerial bombardment and siege by the
US-backed Saudi military. The Saudi-led war on its southern neighbor – the
poorest country in the Arab region – was always an outrageous aggression under
the guise of supporting the return of a corrupt crony who had been ousted by
the Yemenis in early 2015. Up
to 100,000 people have been killed – most of them from the indiscriminate
bombing campaign by Saudi (and Emirati) warplanes supplied and armed by the US,
Britain and France. Millions face starvation in what the UN calls the worst
humanitarian crisis for many years.
The
Saudi rulers, Western governments and media have tried to obscure the genocidal
war on Yemen as a “proxy war” involving Iran, as if Tehran is the instigator of
subverting Saudi Arabia from the south. Iran backs the Houthis politically, and
perhaps also militarily more recently, but any involvement by Tehran is a
reaction to the initial Western-backed Saudi aggression against Yemen.
Claims
by US and Saudi officials that Iran is responsible for the latest air strikes
on Saudi Arabia’s vital oil industry are more of the same obfuscation. Such
muddying of the waters is an attempt to distract from the central point that
the Houthis are retaliating with the legitimate right of self-defense after
years of merciless slaughter inflicted on their people by the Western-backed
Saudi coalition.
There’s
another urgent reason for why the Saudi rulers and the US are trying to blame
Iran for the latest drone attacks on the Saudi oil industry. If admitted that
the air raids were carried out primarily by the Houthis – perhaps even with
Iranian drone technology – then that admission points to the complete
vulnerability of the Saudi oil economy and the very power structure of the
monarchial rulers.
A
hint of the trepidation being felt in Riyadh are reports that the latest air
strikes have rattled stock
markets for Saudi petrochemical companies. Worse, it is also reported that the
attacks may delay the planned stock market listing of Saudi Aramco, the
state-owned oil company. Worse still, the valuation of the company may be
slashed due to the perceived risk from further Yemeni air strikes.
The
planned Initial Public Offering (IPO) of Aramco – whereby the Saudi state is
selling a portion of the company to private investors – has been one of the most
talked about events in recent years among international business. The IPO which
is due to be launched next year has been called the “biggest-ever” stock market
sell-off.
In
an extensive interview with
Bloomberg in October last year, the Saudi Crown Prince, MbS, boasted that it
was the “biggest IPO in human history”. He claimed then that Aramco’s total
valuation was worth $2 trillion. If the Saudis sell off a 5 per cent share in
the company, they are expecting to raise $100 billion in cash. The Aramco IPO
is central to MbS’ ambitious diversification master plan for the entire Saudi
economy, known as Vision 2030. The capital raised from the Aramco sell-off is
intended to catalyze private sector employment and technological innovation in
the oil-dependent kingdom whose budget is unsustainably propping up
government-sector jobs and welfare largesse to prevent the young population of
Saudis rebelling against the sclerotic House of Saud.
After
the Houthis’ devastating air attacks on the Saudi oil heartland – the crown
jewels of the kingdom – potential investors are now reportedly looking warily
at the future risk of Aramco. Valuation of the company in the aftermath of the
Yemeni drone strikes has been slashed by some estimates to $300
billion – that’s down by 85 per cent from the previous aspired-for $2,000
billion. If that downgrade holds or worsens with future Houthi attacks on Saudi
oil infrastructure, then the capital raised from an IPO could shrink from the
$100 billion projected by the Crown Prince to $15 billion. In short, his Vision
2030 plan is down the pan.
It
must be alarming to the young Saudi potentate that US President Donald Trump
has begun to play down any
retaliation against Iran, saying that he doesn’t want to be drawn into a war.
That
means the Saudi monarchs are on their own and at the mercy of the Houthis and
what they do next. The downfall of the scheming Crown Prince evokes a
Shakespearian drama of treachery.
