Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, September 14, 2019. REUTERS/Stringer - RC18BDE58360

September 17, 2019

Iran Hit the West Where it Hurts: At the Pump

The Iranian regime is likely responsible for this weekend’s attack on Saudi oil facilities that caused the largest spike in oil prices in nearly 30 years. This attack on a US ally is a part of a larger Iranian escalation against US and partner interests in the Middle East since May. Iran is now willing to strike these interests harder than before and will do so again if the US does not deter it.

What happened?

Over 20 drones and missiles struck the world’s largest oil-processing facility, the Abqaiq crude-processing plant in eastern Saudi Arabia, on September 14. The attack forced Riyadh *to temporarily reduce oil production by half, causing a surge in Brent crude prices not seen since Saddam Hussein invaded Kuwait and kicked off the First Gulf War. The al Houthi movement, an Iranian-backed Yemeni militia, *claimed the attack and threatened additional strikes. US officials have assessed that the strikes likely originated inside Iran, not Yemen.

The al Houthi movement’s claim gives Iran plausible deniability and advances al Houthi interests within Yemen. This is the second time the al Houthis appear to have falsely claimed an attack in Saudi Arabia; the group *claimed a drone attack in May that US officials attributed to Iranian-backed Iraqi militias. The al Houthi movement is fighting Yemen’s internationally recognized government, which is backed by a Saudi-led Arab coalition that intervened in Yemen’s civil war in 2015. The al Houthi movement is not an Iranian proxy but has grown closer to Iran since 2015 and joined its “Axis of Resistance” network. This network includes Hezbollah in Lebanon and Palestinian terrorist groups. The al Houthis escalated their pace of attacks against Saudi Arabia in May in tandem with the regional Iranian escalation. The Iranian regime furnishes the al Houthis with advanced weaponry, including drones and missiles, which enable these attacks. Such attacks—both real and claimed—are intended to compel Saudi Arabia to accept a ceasefire favorable to the al Houthis, while the prospects for Saudi success or Western intervention in Yemen are limited.

The Iranian regime seeks to distance itself from its malign behavior through its use of proxies and partners throughout the Middle East like the al Houthi movement. The Islamic Republic leverages these groups to attack and threaten Iran’s adversaries and pressure them on multiple fronts. Even if the attacks originated in Yemen, which appears unlikely, they must be understood in the context of the broader Iranian regional effort and proxy network and not strictly within the confines of the Yemen war.

So why did Iran do this?

  • To extract economic concessions from Europe. Iran has violated the Iran nuclear deal following the US withdrawal from that pact to pressure the UK, France, and Germany to offer Iran economic incentives to remain in the international accord. The Europeans have not yet offered Iran meaningful concessions, however. The regime likely hopes for the attack to exact an economic toll on Europe and spur a more concerted European effort to save the nuclear deal.
  • To drive a wedge in the US-Saudi security partnership. Saudi Arabia could conclude that its support for the US maximum pressure campaign is not worth the cost. Saudi Arabia may consider breaking from the Trump administration’s Iran policy if the US does not act to protect Saudi Arabia from future Iranian threats.
  • To stoke instability in global energy markets and raise oil prices. The regime has targeted regional oil assets and infrastructure since escalating against the US and its partners in May. This includes attacking and seizing commercial traffic in waters around Iran, threatening American oil businesses in Iraq, and attacking Saudi pipelines. Tehran seeks to impose a cost on the US for its maximum pressure campaign, and it is working; oil prices jumped as much as 20% following the Abqaiq attack.

The Iranian regime attacked the Abqaiq facility because its regional provocations and escalatory behavior since May have failed to deter the US from pursuing its maximum pressure campaign; US economic pressure has only increased and Europe remains unwilling to help Iran circumvent sanctions. Iran perceived the need to take more drastic action and did so.

The risks of escalation following a US or Saudi retaliatory strike are clear and serious. But inaction also carries serious risks. Iran will likely take further escalatory steps against American and partner interests if the Trump administration does not respond appropriately to this attack. The US conducted a cyberattack against Iran after it shot down an American drone in international airspace on June 20. The attack on the Abqaiq facility makes clear that the cyberattack was insufficient to deter Iran from further escalation. American inaction in response to the Abqaiq attack will only galvanize the regime. The US must calibrate a response that imposes a cost on Iran for its provocations and assuages the concerns of our Arab partners without risking an all-out war in the Middle East.