Responding to Iran’s threats of “all-out war” with the United States, 73-year-old President Donald Trump said the Pentagon was “locked-and-loaded,” after Iran’s Houthi rebels hit Saudi Arabia’s main petroleum refinery yesterday with a predator drone attack. When Secretary of State Mike Pompeo directly attributed the attacks on Saudi’s Abaqiq refinery and its Khurais oil fields to Iran, Tehran responded that it’s ready for “all-out war.” Iran has supplied Yemen’s Houthi rebels with predator drones and ballistic missiles to launch war against the Kingdom. Over the past two years, Iran’s oil infrastructure and its international airport have been targets of the Iran-backed Houthi rebels missile strikes. When markets open tomorrow, Trump ordered the release of millions of barrels of crude oil from the U.S. Strategic Petroleum Reserve [SPR] to offset what promises to be a spike in global crude oil prices.
When oil markets open tomorrow, oil prices could spike from $55 a barrel to $70, adding more downward pressure on a slowing global economy. Although Saudi Arabia accounts for about 10% of the world oil supply, geopolitical events like the Houthi’s attack on Saudi Arabia’s key refinery and oil fields could throw global oil markets into chaos. Trump’s bigger problem is building a global coalition against Iran’s malign activities in the Mideast and North Africa. Up to this point, the European Union [EU], led by French President Emmanuel Macron, has done everything possible to placate Iran, especially in the wake of the Houthi attacks. EU officials haven’t accepted yet that Iran is behind Houthi proxy war against the Kingdom. Now that global oil markets—and indeed the world economy—have been destabilized by the attacks, the EU must take more seriously Iran’s role.
Trump said the White House is in close consultation with Saudi Arabia to pinpoint who’s responsible for the predator drone attacks on the Abaqiq refinery and Khurais oil fields. Saying the U.S. is “locked-and-loaded,” Trump said he’s waiting for Riyadh to provide the evidence of who’s responsible. Pompeo clearly said Iran was responsible for the attacks, not the Houthi rebels in isolation. When you consider that the Houthi’s are used by Iran as proxies, it’s Iran’s responsibility. “Unprecedented attack on the world’s energy supply,” said Pompeo, laying the blame on Iran. “There is reason to believe that we know the culprit, are locked and loaded depending on verification,” Trump said on Twitter. Trump’s language suggests that the U.S. would consider retaliatory strikes on Iran’s oil infrastructure. Responding to that, Tehran threatened “all-out war” if the U.S. retaliates in-kind.
Trump’s critics blame him for pulling out of the July 15, 2015 Joint Comprehensive Plan of Action [JCPOA], the nuke deal that exchanged billions of dollars for Iran’s agreement to suspend it uranium enrichment program. Before Trump cancelled U.S. involvement in the JCPOA, Iran was already in a proxy war with Saudi Arabia, using Yemen’s Houthi rebels as their surrogates. Iran also supplied arms and ballistic missiles to Hamas in Gaza and Hexbollah in Beirut to attack Israel, a close U.S. Mideast ally. So, whatever talk there is about Trump pulling out of the JCPOA causing the current problems, it’s just plain false. Iran’s malign activities in the Mideast and North Afrcia go back to the 1799 Islamic Revolution, where they’ve tried to spread anarchy across a broad cross sections of the Middle East. Goldman Sachs estimates that the late drone attack on Saudi’s oil infrastructure could spike oil $15 a barrel.
Saudi Arabia churns out about 10 million barrels of light crude petroleum a day. Yesterday’s attacks could cut production by 50% for an extended period of time, potentially doing more damage to global crude oil supplies. “Unquestionably, oil prices will be up significantly when the market opens on Monday,” said Mark Dubowitz, CEO of the Washington D.C.-based non-profit Foundation for the Defense of Democracies. Trump’s strong words about ‘locked-and-loaded,” follow Iran’s June 20 shoot-down of a U.S. Global Hawk surveillance drone. Trump was ready to retaliate then but held off because of possible collateral damage. Yesterday’s attack on Saudi’s oil infrastructure is far more egregious, considering the fallout on world oil markets but, more importantly, the global economy. If Trump determines that Iran is primarily responsible for the drone attack, he’ll have no choice but to respond.
Trump’s got some big decisions to make after watching Saudi’s oil infrastructure set ablaze by Iran’s Houthi rebels. Without Iran supplying the predator drones and ballistic missiles, Houths could do very little to dent Saudi Arabia’s defenses. Calling Pompeo’s accusations “meaningless,” “not comprehensible” and “pointless,” Iran’s 59-year-old U.S.-educated Foreign Minister Mohammad Javad Zarif, showed that Iran has pulled out all the stops to deny responsibility. “The Fake News is saying that I am willing to meet with Iran, ‘No Conditions.’ That is an incorrect statement [as usual],” Trump tweeted. Trump told Iran after they downed a U.S. drone that he will respond at a time of his choosing. If Saudi Defense Minister Crown Prince Mohammed bin Salman says its Iran, Trump will be forced to respond, not with more talk or sanctions but decisive military action.
