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Locked and Loaded

The drone attack on Saudi Arabia’s largest refineries presents the US and its allies with a difficult choice.

GAME CHANGERS
On Saturday night, drones attacked two key Saudi Aramco oil facilities - Abqaiq, which is Aramco's largest oil processing plant, and Khurais, a major oilfiled. The attacks sparked a huge fire, the kingdom’s interior ministry said.

As a result of the attacks Saudi Aramco’s oil production halved, Saudi Arabian energy minister Prince Abdulaziz bin Salman said.

Also, the attacks stopped the production of 2 billion cubic feet of daily associated gas, used to produce 700,000 barrels of natural gas liquids, which will lead to an approximate 50 percent decrease of Ethane and natural gas liquids supply.

The return to full oil supply capacity could take “weeks not days”, Al-Jazeera reported.

Yemen's Houthis from the Ansar Allah movement claimed responsibility for the attack. Yet, the United States did not believe them and accused Iran - that Iran supports the Houthis is no secret – and threatened with a crushing blow to Iranian oil facilities. This would punish Tehran for "bad behaviour".

“There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!” president Donald Trump said on Twitter.

Tehran has always been prepared for a full-fledged war, Iran's Revolutionary Guards Corps Aerospace Force Chief Amirali Hajizadeh said.

"Everybody should know that all American bases and their aircraft carriers, at a distance of up to 2,000 kilometres around Iran, are within the range of our missiles," Mr Hajizadeh said.

"Al-Udeid base in Qatar, az-Zafra base in the UAE and a US vessel in the Gulf of Oman would be targeted if Washington took military action," the commander said.

The situation is serious indeed.

The attack can be seen as an act of war and the Saudi Arabia has every right to respond. Yet, if they or the US decide to do so, it will lead to a full-blown conflict.

However, we hope this would not happen.

Long-term reduction in oil supply is not beneficial primarily to the United States. Accordingly, they are unlikely to strike at Iran’s oil facilities.

Rather, they would push the international community to tighten the sanctions against Iran. So far, the US has not been able to convince allies to do so.

Choosing between sanctions and a strike on Iran’s oil facilities, Europe will be more likely to choose sanctions.

If strikes are nevertheless delivered, then fuel prices will skyrocket for a long period of time, and this will lead to a full-blown economic crisis.

Published: September 16, 2019