Saudi Arabia, Iran, USA and oil

One of the world’s riskiest situations is developing in one of the most volatile regions of the world, the Middle East, after oil production facilities were bombed by drones. The US has blamed Iran. The US has close ties with Saudi Arabia.

Oil production has been affected, with prices surging following the attack (but settling back a bit since).

MSN: Saudis face lengthy oil halt with few options to fill gap

The oil market is facing a prolonged disruption to Saudi Arabia’s oil production with few options for replacing such huge output losses.

The weekend attacks on the kingdom eliminated about 5% of global oil supply — and raised the risk of more conflict in the region — propelling Brent crude to a record surge on Monday. Officials at state oil company Saudi Aramco have become less optimistic on the pace of output recovery, telling a senior foreign diplomat they face a “severe” disruption measured in weeks and months and informing some customers that October shipments will be delayed.

The historic price gain underscores the unprecedented nature of the disruption caused by the drone attack on the Abqaiq crude processing plant. For decades, Saudi Arabia has been the oil market’s great stabilizer, maintaining a large cushion of spare production capacity that can be tapped in emergencies, such as the 2011 war in Libya.

The halt of 5.7 million barrels day of the kingdom’s production — the worst sudden supply loss in history — exposes the inadequacy of the rest of the world’s supply buffer.

Petrol prices have already risen in New Zealand. I don’t know why that has happened so quickly, petrol in tanks here should be the same price as it was last week. Is there any other market that changes prices based on possible future cost rises?

ABC News:  U.S. intel shows cruise missiles fired at Saudi oil facility came from Iran, officials say

The attack on a major Saudi oil facility originated geographically from Iranian territory, with a series of low-altitude cruise missiles fired from at least one location in the western region of the country, according to two U.S. officials familiar with the latest intelligence.

The intelligence assessment draws a more clear link between the attack and Iran, and it could worsen tensions between Washington and Tehran.

U.S. officials are considering possible multilateral sanctions with allies against Iran as part of the response to the attacks…

The Department of Defense has advocated for restraint. But it has provided a briefing on military options to President Donald Trump, who over the weekend tweeted that the U.S. is “locked and loaded” and ready to respond, once it officially determined who was behind the attack.

Three U.S. officials previously told NBC News there was extremely compelling evidence showing the origination point of the strikes, and one official with direct knowledge described that evidence as imagery.

That’s image based imagery, not imaginary.

A Saudi military spokesman says initial investigations show Iranian weapons were used in the attack.

Iran’s Supreme Leader Ayatollah Ali Khamenei said Tuesday no talks would take place between Iran and the U.S. “on any level…

Reuters: U.S. lawmakers blast Iran, wary of war, after Saudi oil attack

Members of the U.S. Congress blasted Iran after the attack on Saudi Arabian oil facilities, but expressed wariness about U.S. military action, especially before they have a clearer picture of who was behind it.

President Donald Trump said the United States was “locked and loaded” to hit back after Saturday’s attack, which knocked out more than half of Saudi Arabia’s oil production and damaged the world’s biggest crude processing plant.

Iran denied U.S. accusations it was to blame and said it was ready for “full-fledged war.”

U.S. lawmakers, especially Trump’s fellow Republicans, were quick to blame Tehran.

Mitch McConnell, the Senate’s Republican majority leader, called it “a brazen attack” with significant implications for the global energy market and said he welcomed Trump’s preparation to potentially release oil from the Strategic Petroleum Reserve to stabilize markets if necessary.

Many lawmakers stressed that Congress, not the president, has the right to declare war and warned against any quick military action.

Trump may not be able to initiate quick military action on his own, but he is capable of escalating tensions and the prospects of war via Twitter.

Military action would likely put oil production and supply at even more risk.

Congress, with backing from both Republicans and Democrats, has passed – but Trump has vetoed – four bills seeking to push back against Trump’s strong support for the Saudi government, despite its human rights record and steep civilian casualties in the war in Yemen.

Trump and the US say nothing against Saudi Arabia’s involvement in the Yemeni war – and supply the Saudis with arms.

Wikipedia:  2017 United States–Saudi Arabia arms deal

On May 20, 2017, U.S. President Trump and Saudi Arabia’s Salman bin Abdulaziz Al Saud signed a series of letters of intent for the Kingdom of Saudi Arabia to purchase arms from the United States totaling US$110 billion immediately, and $350 billion over 10 years. The intended purchases include tanks, combat ships, missile defense systems, as well as radar, communications and cybersecurity technology. The transfer was widely seen as a counterbalance against the influence of Iran in the region and a “significant” and “historic” expansion of United States relations with Saudi Arabia.

Saudi Arabia is a key U.S. ally in the Middle East.

Between 2011 and 2015, Saudi Arabia was the destination for nearly 10% of all U.S. arms exports

The 2017 deal was partially created with the help of Jared Kushner, son-in-law of and senior advisor to President Trump

So the attack on the Saudi oil production facilities raises tensions significantly between the US and Iran. The risks may temper responses, but I think it likely that there will be some sort of retaliation.  Economic sanctions are already in place against Iran, so that must be a limited option. If Iran is indeed responsible for the attack it may in part be an attempt to enhance the value of their own oil to compensate for sanctions.

Whatever, it’s complex and it’s a high risk game being played in the Middle East that could significantly impact on the world.

 

 

Yemeni war continues, as does the arms industry

The war in Yemen has been going for three years, but it doesn’t get much attention still. But like Syria, it is not just an internal battle, it is a battle that regional and international powers are also involved in, with little success except for feeding the arms industry.

Reuters: Saudi-led coalition conducts air strikes on Yemen’s Hodeidah airport

Houthi forces fought to keep control of the airport in Yemen’s main port city of Hodeidah on Sunday as Saudi-led coalition air strikes struck the compound, in an offensive that could be a turning point in the three-year conflict.

Losing Hodeidah would deal a serious blow to the Iran-aligned Houthis, cutting supply lines from the Red Sea to their stronghold in the capital Sanaa.

It could also give an edge to the Western-backed military alliance which, despite superior weaponry and firepower, has failed to defeat the Houthis in a war that has killed 10,000 people and created the world’s most urgent humanitarian crisis.

The coalition wants to restore an internationally recognized government in exile and thwart what Riyadh and Abu Dhabi believe are arch-foe Iran’s ambitions to dominate the region.

Riyadh is Saudi Arabia, and is Abu Dhabi is United Arab Emirates – so they are battling Irani influences in Yemen. And the US is in the mix too.

The offensive could also have ramifications further afield due to Yemen’s role in a proxy war between Saudi Arabia and Iran that has fueled instability across the Middle East.

U.S. President Donald Trump’s withdrawal from Iran’s nuclear deal and his embrace of nuclear state North Korea have added to Tehran’s isolation and put pressure on the Islamic Republic to preserve its interests in Yemen and other Arab states.

 

The United Nations says the assault on Hodeidah could trigger a famine imperiling millions of lives. Many residents are bracing for more hardship as the warring sides dig in.

Imperilling millions of lives – the collateral damage. The population of Yemen is about 28 million people.

In March US approves proposed $1bn arms sale to Saudi Arabia

The US State Department has approved a possible arms sale to Saudi Arabia worth more than $1bn.

“This proposed sale will support US foreign policy and national security objectives by improving the security of a friendly country,” the statement read.

But campaigners, including some US legislators, are urging western governments to halt or limit arms sales to Saudi Arabia because of its involvement in a devastating civil war in Yemen.

The Saudi military offensive, which began in March 2015, has killed at least 10,000, displaced more than 2 million people and pushed Yemen to the brink of famine.

US Secretary of Defence Jim Mattis, speaking ahead of a Pentagon meeting with bin Salman on Thursday, said Saudi Arabia was “part of the solution” in Yemen.

Meanwhile, Amnesty International, in a statementon Friday, said there “was extensive evidence that irresponsible arms flows to the Saudi Arabia-led coalition have resulted in enourmous harm to Yemeni civilians”.

“But this has not deterred the USA, UK, and other states, including France, Spain and Italy, from continuing transfers of billions of dollars’ worth of such arms,” it added.

Also Nearly half of US arms exports go to the Middle East

Nearly half of US arms exports over the past five years have gone to the war-stricken Middle East, with Saudi Arabia consolidating its place as the world’s second biggest importer, a report has shown.

The Stockholm International Peace Research Institute (Sipri) said on Monday that global transfer of major weapons systems between 2013 and 2017 rose by 10% compared with the five-year period before that, in a continuation of an upward trend that began two decades ago.

The US, which is the world’s biggest exporter, increased its sales between those two periods by 25%. It supplied arms to as many as 98 states worldwide, accounting for more than a third of global exports.

Russia, the world’s second biggest exporter, saw a decrease of 7.1% in its overall volume of arms exports; US exports were 58% higher than those of Russia.

France, Germany and China were also among the top five exporters. The UK is the sixth biggest weapons exporter.

Killing people and destroying stuff is big business.

The Nation: interview with Boris Johnson

I’m not sure what the point of his visit was.  He isn’t in a position to commit to anything on NZ trade with the UK, nor with visa conditions.

So Owen doesn’t bother spending long on NZ related issues and goes on the the Middle East, arms supplies to Saudi Arabia and the civil war in Yemen.

That’s a novel approach – that should sort things out pretty quickly.

Yemen raid reality check

The US raid in Yemen targeting members of Al Qaeda has inflicted civilian casualties as well, including children and a US commando.There has also been reports an American girl may have been killed.

Acting tough with the US military has it’s risks.

Al Jazeera: US admits civilians ‘likely’ killed in Yemen raid

Civilians were “likely” killed in a US commando raid in Yemen over the weekend and children may have been among the dead, the US military’s Central Command (CENTCOM) said.

“A team designated by the operational task force commander has concluded regrettably that civilian non-combatants were likely killed in the midst of a firefight during a raid in Yemen January 29. Casualties may include children,” CENTCOM said in a statement late on Wednesday.

Yemeni officials had previously said 16 civilians – eight women and eight children – were killed in the raid in the southern province of al-Bayda, but CENTCOM did not provide any numbers.

The civilian deaths appear to have occurred when US aircraft were called to help the commandos as they conducted the dawn raid that US officials said killed 14 members of al-Qaeda in the Arabian Peninsula (AQAP).

“The known possible civilian casualties appear to have been potentially caught up in aerial gunfire that was called in to assist US forces in contact against a determined enemy that included armed women firing from prepared fighting positions, and US special operations members receiving fire from all sides to include houses and other buildings,” the statement added.

Officials were conducting an ongoing “credibility assessment” to see if there may have been additional civilian casualties in the intense firefight, it said.

Since the January 29 raid, Washington has faced questions as to whether an eight-year-old American girl was killed during the firefight.

New York Times: Raid in Yemen: Risky From the Start and Costly in the End

Just five days after taking office, over dinner with his newly installed secretary of defense and the chairman of the Joint Chiefs of Staff, President Trump was presented with the first of what will be many life-or-death decisions: whether to approve a commando raid that risked the lives of American Special Operations forces and foreign civilians alike.

President Barack Obama’s national security aides had reviewed the plans for a risky attack on a small, heavily guarded brick home of a senior Qaeda collaborator in a mountainous village in a remote part of central Yemen. But Mr. Obama did not act because the Pentagon wanted to launch the attack on a moonless night and the next one would come after his term had ended.

With two of his closest advisers, Jared Kushner and Stephen K. Bannon, joining the dinner at the White House along with Defense Secretary Jim Mattis and Gen. Joseph F. Dunford Jr., Mr. Trump approved sending in the Navy’s SEAL Team 6, hoping the raid early last Sunday would scoop up cellphones and laptop computers that could yield valuable clues about one of the world’s most dangerous terrorist groups. Vice President Mike Pence and Michael T. Flynn, the national security adviser, also attended the dinner.

As it turned out, almost everything that could go wrong did. And on Wednesday, Mr. Trump flew to Dover Air Force Base in Delaware to be present as the body of the American commando killed in the raid was returned home, the first military death on the new commander in chief’s watch.

It may have been that Trump did little more than rubber stamp a planned incursion in this case, but “two of his closest advisers, Jared Kushner and Stephen K. Bannon” doesn’t give me a lot of confidence.

At least one US casualty plus significant embarrassment may not dent trump’s confidence he can sort eliminate Al Qaeda and ISIS, but it shows that it is not a simply thing to do, even on a small scale like this.