THE HOUTHI REBELS DRONES EXPOSE SAUDI UAE AND US AIR DEFENSE
The Houthi Rebels conjure up a picture of a poorly trained and ill equipped fighting force, the sort that would seek refuge in caves or a djebel somewhere in the desert. But like so many of the rag-tag resistance groups that have come before them, they are proving endlessly resilient. According to Gulf News ten automated, aerial, combat drones launched an attack on Saudi Aramco’s Abqaiq plant in Buqyaq and the Khurais oil field on Saturday at 3:31 a.m. and 3:42 a.m. local time. Attacks on Saudi Arabia's pivotal Abqaiq processing facility and Khurais oil field have raised questions over the vulnerability of the kingdom's production capability. Saudi Arabia said the drone attacks on saturday had caused them to suspend the production of 5.7 million barrels of oil a day (almost 6% of global production) but re-iterated export customers would continue to be supplied from inventories; Saudi stockpiles totalled 187.9 million barrels in June.
The Abqaiq facility is the single most important facility in Saudi's oil industry, it is Aramco's largest oil processing facility and processes about 50% of the company's crude oil production. Khurais is the second biggest oil field.
After a number of strikes on key oil infrastructure and shipping routes this attack is a potential game changer. In recent times flows had been temporarily halted through Saudi Arabia's main oil transport pipeline to terminals and refineries on the Red Sea, whilst oil tankers have come under attack in the Persian Gulf, but nothing of this magnitude which palpably demonstrates the Houthi ability to punish Riyhad severely. That is of course if we accept that it was carried out by the Houthi and not the Iranians. The US seem in no doubt, Despite the Houthi rebels claiming responsibility for the strikes, the American Secretary of State blamed Iran, rejecting the claims by Yemen's Iran-backed Houthi rebels that they had carried out the attacks. Kelly Anne Conway also stated " "The Iranian regime is responsible for this attack on civilian areas and infrastructure vital to our global energy supply, and we're not going to stand for that... We will continue our maximum pressure campaign in Iran." Iran's Foreign Minister Javad Zarif responded by saying that "blaming Iran won't end the disaster" in Yemen.
I must raise the question of quite how these drones penetrated the expensive Saudi air defence systems to hit strategic targets so deep inside the county's territory. The US Fifth Fleet is based in Bahrain, and America has air bases and other facilities along the Gulf from Kuwait to the UAE protected by its air defense. It seems odd that these drones were able to seek and destroy their targets uncontested and under the radar. It is difficult to fathom and perhaps only time will tell.
It has to be said that over the last year or so the Houthis have developed their capacity to hit targets in both the UAE and Saudi Arabia. A Houthi drone hit a Saudi Aramco oil refinery outside the capital Riyadh in July, a company executive and a Gulf official said. That month, a Houthi drone evaded Emirati air defenses and exploded at Abu Dhabi’s international airport in the United Arab Emirates. These strikes have been denied by the saudi, emerati and US authorities and the Houthis derided as a backward, tribal group that lacks sophistication. Such a narrative allays concerns and allows any blame to be directed at Iran, a more technically sophisticated and politically ameanable foe. The WSJ in an article published in May highlighted increasing Houthi sophistication
The attack will cause a spike in crude oil benchmarks particularly dated Brent, on monday morning, this commentator believes the market is likely to go into steep backwardation, Platts Analytics have forecast that additional risk premiums "could see prices test $80/b despite Saudi assurances that, " production and exports will not be significantly impacted ".
Saudi crude is generally a mix of heavy to medium sour oil, which is generally high in sulphur and yields a decent amount of residual fuel and vacuum gasoil. particularly popular and well suited for the complex Saudi Chinese JV refineries and those in Asia, US and Europe which can crack heavy sulphurous crudes, and still yield distillate products due to the refiners having complex secondary units.
Dominic Raab, the Foreign Secretary, called the strikes an “egregious attack on the security of Saudi Arabia" and a "reckless attempt" to disrupt global oil supplies. Yet he is quiet when Saudi warplanes with British munitions bomb school buses and kill innocent children