Iranian backed Houthi rebels launch a drone attack against Saudi Arabia's largest oil facility.

A satellite view of the oil facilities burning. Politico/AP/NASA.

Iranian backed Houthi rebels launch a drone attack against Saudi Arabia's largest oil processing facility. Politico. President Trump has blamed the Iranian government for the attack which processes half of Saudi Arabia's oil. It is unclear where the drones came from. Iran has launched several drone attacks against the kingdom during the war in Yemen. The attack seems to have destroyed any chance of President Trump meeting with Iranian President Hassan Rouhani. The Department of Energy may release assets from the Strategic Petroleum Oil Reserve to offset any disruption in global oil supplies caused by the attack. 

My Comment:

This is a major escalation in the Yemen proxy war. Iran, through their Houthi rebel proxies, have launched many attacks against Saudi Arabia itself, but none have been this effective. With this drone strike Iran has damaged half of Saudi Arabia's oil production and massively disrupted their economy. 

This is, of course, a major act of war. An attack like this will almost certainly draw some kind of response. I wouldn't be surprised if Saudi Arabia launches some kind of reprisal attack. Either against the Houthi proxy army in Yemen or in Iran directly. This could lead to a major conflict breaking out. 

What do I think will happen? I am not sure. Iran has come close to drawing airstrikes before and this might be a red line for Saudi Arabia. I know President Trump doesn't want a war with Iran, but it might not be up to him. The Saudis may launch their own strikes, either conventional in nature or otherwise, on Iran's oil facilities. 

There seems to be some argument about whether the Iranians are responsible for the attack or not. That seems to be a moot point. Iran gave these drones to the Houthi rebels as they do not have the capability to develop them on their own. Even if the Iranian government didn't order or carry out the attack directly, they are still responsible for the attack. Indeed, it's likely that they played a major role in this attack beyond just handing the drones to the Houthis. 

The Yemen conflict has been a strange war. I think the term is hybrid warfare, where a non-state actors use both conventional and unconventional attacks. The Houthi rebels are an exceptionally well-armed group who have access to drones and ballistic missiles. They are a huge threat. 

This, of course, could cause an increase in oil prices. America should be insulated from this due to our massive glut of oil production. We are a net energy exporter right now so what happens in the Middle East no longer effects us as much. 

However, Europe could be in trouble. They get much of their oil from Saudi Arabia and are barred from getting oil from Iran. They will be put into an uncomfortable position of having to choose between Iran and their cheap oil or risking angering the United States and heir Saudi and Israeli allies. It's not a good choice for either of them but they risk damage to their economy no matter what. 

I am hoping cooler heads will prevail here. I don't think a war between Iran and Saudi Arabia is too likely, at least not a full scale one where one side invades the other. There might be a limited air war but that's probably about it. Even then, most of the damage will be economic as the market panics when this kind of conflict happens. My hope is that the Saudis calm down and don't do anything drastic...