Saudi Arabia is facing a difficult dilemma in the US-Iran conflict, having launched joint strikes with the US on Iranian proxy militias in Iraq on July 13. The Saudis have been attacked from three sides, prompting them to hit back as a deterrent.
Saudi Arabia's Conflict with Iran
The conflict between Iran and the US, which began on February 28, has drawn in the Gulf Arab states, including Saudi Arabia. Iran has been concentrating its drone and missile attacks on Jordan, Kuwait, and Bahrain, as well as targeting commercial shipping in the Strait of Hormuz.
The addition of Iraqi militias and the Houthis in Yemen has expanded the conflict, making it increasingly difficult for Saudi Arabia to stay out of it. The Saudis have been under attack from the Houthis in Yemen, who have launched drone strikes on Saudi oil facilities, including the Abqaiq oil facility, which was struck on Monday.
Background and Context
There are broadly two sides in the conflict: Iran and its allies, including the Houthis in Yemen and the Popular Mobilisation Forces in Iraq, and the US and its allies, including the Gulf Arab states and Jordan. The conflict has been ongoing for five months, with Iran retaliating against US and Israeli attacks by closing off the Strait of Hormuz.
Saudi Arabia's de facto ruler, Crown Prince Mohammed Bin Salman, has embarked on a course known as "Vision 2030", which aims to diversify the Kingdom's economy away from oil revenues and create modern industries. However, this plan is under threat from the ongoing conflict, which has made it difficult for Saudi Arabia to attract foreign investment and build critical infrastructure, such as data centers.
What's at Stake for Saudi Arabia
The conflict has significant implications for Saudi Arabia's economy, which is still heavily reliant on oil exports. The closure of the Strait of Hormuz has forced Saudi Arabia to pump oil through its east-west pipeline to its export terminal on the Red Sea, at Yanbu. However, the Houthis have begun attacking Saudi shipping in the Red Sea, making it dangerous for ships to pass through the narrow Bab El Mandeb strait.
Saudi Arabia spent seven years trying to bomb the Houthis into submission, but failed. The war in Yemen was one of the worst humanitarian disasters of our time, and its effects are still being felt. In 2022, Saudi Arabia agreed to an uneasy truce with the Houthis, but the truce has broken down, and Saudi Arabia is once again facing the threat of drone and missile attacks from its southern neighbor.
As the conflict continues to escalate, Saudi Arabia must decide whether to keep hitting back as a deterrent or try to de-escalate the situation. The outcome will have significant implications for regional stability and global oil markets. Readers should watch for further developments in the conflict and their impact on Saudi Arabia's economy and regional stability.
