Oil prices surge after Yemen rebels launch strikes

Oil prices rocketed to their highest level in over a year Sunday night, after Yemen’s Houthi forces claimed simultaneous missile and drone attacks on both coasts of Saudi Arabia.

On the eastern, Gulf coast, drones and missiles struck Saudi ARAMCO facilities at Ras Tanura – one of the largest oil ports in the world – causing unknown damage.

At the same time, the Iranian-backed Houthis also claimed strikes in the Asir and Jazan regions, on Saudi Arabia’s western, Red Sea coast.

The attacks came amidst a raft of recent developments, too, both on the ground in Yemen and internationally.

These range from the recent Organisation of Petroleum Exporting Countries (OPEC) decision to maintain oil production cuts, to efforts to reboot the Joint Comprehensive Plan of Action (JCPOA) on the Iranian nuclear programme.

On the ground, too, recent weeks have seen an escalating drone and missile campaign against Saudi Arabia, along with an intensified Houthi assault on the Yemeni city and governorate of Marib.

This is the key remaining stronghold for the internationally-recognized, Saudi-backed Yemeni government. 

Amidst all of this, the future looks bleak for the people of Yemen, who face economic collapse, increasing hunger and the Covid-19 pandemic, while the fighting rages on.

Price of oil

The missile and drone attacks hit oil markets at a time of great sensitivity, following the March 4 OPEC meeting.

That gathering of top oil producers decided to maintain current production cuts, meaning, “There is going to be about 1.5 million barrels per day less oil on the market,” Rory Fyfe, managing director of consultancy MENA Advisors, told Asia Times.

That cut combines with rebounding oil demand, particularly in Asia.

As a result, “Supplies are tight and the oil market is on edge,” Fyfe says. “Any incremental risk – such as the possibility of the Houthis damaging Saudi facilities – is quickly reflected in spot prices.”

These jumped to $71.38 a barrel for benchmark Brent crude futures – the highest since January 2020 – and $67.98 for West Texas intermediate, the highest since October 2018.

The last major attack on Saudi ARAMCO facilities claimed by the Houthis, back in September 2019, caused the kingdom to shut down around half its oil production. It was dubbed by then-US Secretary of State Mike Pompeo as, “an unprecedented attack on the world’s oil supply”.

Smoking guns

Back then, Pompeo also supported Saudi Arabian claims that the attacks had not been launched by the Houthis themselves, but by their Iranian backers, just across the Gulf.

The Saudi energy ministry reiterated these claims Sunday, too, saying in a statement that Ras Tanura had been hit by a drone “coming from the sea” – Iran lies just across the Gulf from the Saudi port.

Recent days have also seen Saudi claims that other drone strikes have been launched by pro-Iranian militias in neighboring southern Iraq.

“Saudi Arabia blames Iran for the spate of missile attacks targeting its cities, airports, and its oil facilities,” Elham Fakhro, the International Crisis Group’s senior Gulf analyst told Asia Times. “The most recent attack will only reinforce perceptions in Riyadh that the US and European states should not revive the Iran nuclear deal without concrete conditions limiting Iran’s ballistic missile programme, and its role in supporting proxy groups across the region, including in Yemen.”

Indeed, the JCPOA is increasingly central to the recent escalation in attacks.

“As the conflict has continued in Yemen, the Houthis have become increasingly reliant on Iranian support,” Abdulghani Al-Iryani, senior researcher for the Sana’a Centre, told Asia Times. “This makes it easier for Iran to link Houthi activity to developments with the JCPOA.”

Efforts by the US to re-join this – and by Europe, China and Russia to restart negotiations with Iran – have so far failed, with Tehran insisting that sanctions against it be lifted before talks can resume.

Behind this, some analysts see domestic Iranian political struggles, in the lead up to Iran’s presidential elections in June.

“The missile and drone attacks are in line with Iran pushing the escalation button across the region,” Dr Clemens Hoffman, a Middle East expert from Stirling University, told Asia Times. “With an economic crisis and a Covid-19 crisis at home, there is a lot of tension. The hard-liners in power are doing what they usually do in such circumstances and escalating abroad to divert attention from back home.”

Real guns

On the ground in Yemen, meanwhile, the Houthis are making a major push in and around Marib.

There, the government’s position “is very precarious,” says Al-Iryani. “If they can cut the city off, they will eliminate the presence of the government and force negotiations with the Saudis.”

So far, Saudi Arabia and the Yemen government have refused to negotiate with the Houthis, describing them as a terrorist group. The Houthis, meanwhile, refuse to negotiate with the government, demanding direct talks with the Saudis.

UN efforts to bring them together have also so far failed to halt the fighting.

“The Houthis are trying to show the international community they are in control of all of Yemen,” Sultan Al Arada, the governor of Marib, told this correspondent and other journalists Monday afternoon on a Zoom call from the beleaguered city. “When they talk about peace, they just intensify their attacks.”

Since January 2020, some 17,000 pro-government soldiers have been killed in the fighting in and around Marib, Al Arada said, along with around 40,000 wounded.

Some two million civilians have also fled to the governorate since the current war began, dramatically swelling its population and posing a major humanitarian challenge.

“If Marib falls, it will be a loss not just for Yemen, but for all humanity,” Al Arada says.

It also poses a major dilemma for the new US administration, which had promised to launch a major intervention to halt the conflict.

“If diplomacy fails, the US administration [has] one of two choices – both of them bad,” says Al-Iryani. “They can either abandon Yemen and turn their attention elsewhere, or they can give the Saudis and the Yemeni government support to change the military balance back again. Either way leads to more conflict.”

There are no clear ways forward then, in Yemen’s unfolding tragedy.