Last Saturday, facilities of Saudi oil company Aramco, in Abqaiq, and in the Khurais oil field were attacked with drones, using very sophisticated technology. In principle, the Yemeni Houthis rebels claimed the attack; This group has been fought by the Saudi Kingdom for the past four years. Iran, on the other hand, supports Yemeni rebels. In this regard, reports suggest that the technology used to carry out the attacks came from Iran.
The attack caused the interruption of 5% of the world oil supply, a situation never seen, neither during the Iraqi invasion of Yemen, nor because of the oil embargo on Iran. In principle, Saudi reserves will try to maintain the flow of oil without interruption, however, specialists in the field estimate that repairs to normalize production at both the Abqaiq plant and the Khurais field will take months.
Oil prices worldwide have already started to rise. Most worrying, however, is that countries dependent on Saudi crude will have to look for alternatives for their supply. It is here that we will begin to see the geopolitical game of the powers, since this interruption occurs just at the moment when the world witnesses a trade war between China and the United States, and tensions of the Western powers with Iran and with Russia.
The United States, for practical purposes, is self-sufficient in energy thanks to fracking and the little that matters in Saudi Arabia can easily be remedied by increasing the extraction of crude oil by this route, although at higher costs. On the other hand, the Saudis are the second oil exporter for the Chinese market, only after Russia. Without Saudi oil, the Chinese economy could be affected in the short term, further decreasing its economic growth and affecting the world economy. Likewise, South Koreans and Japanese rely heavily on Saudi oil.
The United States does not want the price of oil to return to three digits, because it would diminish its economic growth through the increase in the prices of its industrial production. Russia, on the other hand, since it is an oil-exporting country, it is convenient for prices to rise. Thus, both China and Europeans would be affected by an increase in Russian oil and energy prices. The way you could turn around and keep prices low until the Saudis repair their facilities, is by buying from Iran.
However, today the United States maintains sanctions against the Iranians. Thus, the fact that Chinese and Europeans replace Saudi oil with Iran would generate greater diplomatic conflicts between the United States and these powers. This attack could have very serious consequences for the world economy. Mexico will not be oblivious to the problems that develop from here, especially if this means a slowdown in world growth much more pronounced than expected.
Ricardo Solano Olivera, MSc.
Column originally published at https://laopinion.de/2019/09/17/debemos-preocuparnos-por-el-ataque-contra-la-petrolera-aramco/