Data from @YemenData and @ACLEDINFO
In a double slap in the face to MbS, the Houthis’ refusal to attend
the peace conference was followed up by a massive cross-border strike on
Saudi Arabia and escalated attacks on government-controlled areas in
Yemen.
The attacks inside the Kingdom caused no casualties but sparked a
fire at Aramco’s North Jeddah Bulk Plant and disrupted production at a
petrochemicals complex in Yanbu on the Red Sea coast. Satellite photos
by Planet Labs PBC showed the attack struck the same oil storage tank in
the North Jeddah Bulk Plant that the Houthis had previously hit in November 2020.
At a press conference afterwards the Saudi Energy Ministry acknowledged a
temporary drop in oil output at the 400,000-barrel-a-day Yanbu site,
without elaborating. The disruption “will be compensated for from the
inventory," the ministry said, again without elaborating.
The Saudi Press Agency then issued a statement quoting the Saudi
Foreign Ministry as saying that the kingdom “declares that it will not
bear any responsibility for any shortage in oil supplies to global
markets in light of the attacks on its oil facilities.” And it went on
to say “the international community must assume its responsibility to
preserve energy supplies,” in order to deter attacks that jeopardize
“the kingdom’s production capability and its ability to fulfil its
commitments.”
This was a remarkable demand for several reasons.
Firstly, when the Saudis launched their war against the Houthis in
2015 MbS claimed it would all be over in a matter of weeks; victory was
just around the corner. Seven years of war later that claim has come
back to haunt him. The kingdom and its essential energy sector are under
attack and the crown prince who also serves as defence minister has
shown himself incapable of protecting it. This foreign ministry
statement effectively admits defeat.
Secondly, unlike the 2019 Abqaiq attack
on Aramco which was on a different scale of magnitude affecting more
than 30% of Saudi production, the Jeddah plant processes oil derivatives
for domestic supply and so production and exports were unaffected. That
enabled Saudi Aramco CEO Amin H. Nasser to tell reporters the attacks had no impact on oil supplies.
On the question of oil supplies, MbS could now, if he wished, open
the pipe and immediately add 3.5 million barrels per day to the world
quota which would go a long way to calm oil markets.
After the Abqaiq attack Saudi Arabia stressed it would speedily
return to normal levels of production. There were no stark warnings
about not taking responsibility for global oil supply shortages and no
demands for “the international community to assume its responsibility.”
This time around, MbS is playing the deflection and blame game while
looking for ways to escape mounting pressure from western governments to
increase production.
Last week Boris Johnson visited Riyadh to tell the prince to his face
and on behalf of both President Biden and himself that if he does not
cooperate soon over energy policy there will be serious consequences for
him. (For more on the visit see yesterday’s newsletter.)
Whether MbS will heed this warning remains to be seen. Jared Kushner
and Donald Trump are encouraging the prince to stand firm in an attempt
to destroy Biden’s upcoming election prospects, a strategy which already
looks to be paying dividends as the US media turns to blaming Biden for
the energy crisis.
On Tuesday
the Saudi Cabinet issued a statement that the OPEC+ oil producers’
alliance plays an “essential role” in bringing balance and stability to
oil markets but made no mention of increasing production.
According to the WSJ the Saudis’ next move could be selling some oil
in Chinese yuan. Such a move has often been posited in the past, but
this time it looks more likely, in a limited form at least, as it would
be another way for MbS to embarrass Biden.
The fact this story appeared in the WSJ however means it should be treated with a degree of caution. Like Axios, the WSJ has recently published false information about Saudi Arabia including the widely quoted article
about MbS refusing to take a call from Biden. What actually happened is
President Biden called King Salman and the Royal Court told him the
king could not take his call, but he could speak to the crown prince
instead. Biden refused. The WSJ story, which the White House said was inaccurate after it was published, presented the exact reverse.