Sep 19, 2019

Iran's militarized oil blackmail exposes failure of deterrence

Pieces of cruise missiles and drones recovered from the attack and identified by Saudi Arabia as Iranian. Photo: Fayez Nureldine/AFP/Getty Images

This past weekend's strikes on critical infrastructure at Saudi Arabia's second largest oil field at Khurais and its vital crude oil stabilization center at Abqaiq virtually eliminated the cushion of spare oil field capacity that typically prevents market panics during large supply disruptions.

Why it matters: The attack marks a major escalation of the proxy war between regional rivals Saudi Arabia and Iran that has raged since 2015, though there have been previous acts of sabotage on oil facilities. Its success shakes confidence in Saudi Arabia's status as the global swing producer of spare oil supply, a role that has afforded Riyadh substantial influence.

Between the lines: The U.S. and its allies are now gaping at the failure of traditional paradigms of military deterrence in the age of asymmetric warfare, despite a buildup in U.S. Naval presence in recent months. This weekend's attack proved out Iran's destructive capabilities while testing American resolve to remain militarily active in the Middle East.

  • Iran's rulers are gambling that they can survive any punitive attack on their own military installations and that subsequent attacks by Iran or its proxies on Saudi or other high-value oil targets in the region would hurt the legitimacy of those Arab governments more than its own.
  • The complexities of the situation create a vast political dilemma for President Trump ahead of the 2020 election. His rhetoric about being tough on Iran is already ringing hollow, and initiating military action would likely meet even less popular support.

What to watch: The U.S. would need to spring into diplomatic hyperdrive to build a coalition at the United Nations and beyond for a unified approach.

  • But since the big economies of Europe and Asia depend far more on Middle East oil than the U.S., whose domestic production has risen substantially, Iran may hope it can undermine multilateral support for the U.S. sanctions campaign.

The bottom line: Submitting to militarized oil blackmail by Iran is in no one's long-term interests, either economically or geopolitically. To remove the current threat, the U.S. would likely need a strong international consensus like the one it was able to forge around the issue of shipping passage through the Strait of Hormuz.

Amy Myers Jaffe is the David M. Rubenstein Senior Fellow for Energy and the Environment at the Council on Foreign Relations and director of its program on energy security and climate change.

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