The attack that shut down Saudi Arabia’s East-West oil pipeline (aka the Petroline) has been traced to Iranian-backed militias in Iraq.
So, the prospect of defending Saudi energy infrastructure is nothing more than a pipe dream at this point. And given the very limited interaction between Iran and the U.S., I wouldn’t expect things to improve for the Saudis anytime soon.
Hey all, Peter Zeihan here. Coming to you from the Denver airport. Just a quick update on something that’s been going on for the last couple of weeks. If you remember last month. No. Earlier this month…busy month. The Iranian forces launched drones and struck the east west pipeline. That’s the bypass pipeline that the Saudis use, so they don’t have to use the Persian Gulf in the Strait of Hormuz. And that maximum capacity can handle 7.5 million barrels per day. Anyway, shut it down. Hit a pumping station, and it took almost three weeks to get it back online. We’ve now confirmed that the attack didn’t originate from Iran or even from Yemen, but instead from Iraq. So Iranian backed militias in Iraq are the ones who launched it from the Maysan province. Baghdad authorities confirmed that overnight, last night. And what this basically means is that there’s absolutely no way that the Saudis can protect any of their energy infrastructure, because if you’ve got attacks that can come from the South or the north or the east, that means you have to defend everything from every direction. And no one could do that. There’s also no way that you can really prevent Iraq from being used as a launch pad, as long as the political system in Iraq doesn’t settle. Remember that the United States tried to make this settle with 100,000 troops over 15 years and failed more or less completely. And all you need to do is to have a garage that can store these things with a little launcher that you can put together in a couple of hours with some basic welding skills. And that assumes that the Iranians don’t smuggle in more advanced drones.
So if you were hoping for some return to pre-war normal when it comes to Saudi exports, you can pretty much kiss that goodbye now. It’s just a matter of time until that’s all gone. And that’s not limited to Saudi Arabia. The only other possible option is a political deal that re-regulates how oil moves and transport moves in this region that, at a minimum, requires a deal between the United States and Iran. And with the exception of a little side meeting that Secretary of State Rubio had with the Iranians when they were in town in New York for the UN General Assembly meeting last week. There have been no talks at all directly between the Americans and the Iranians and nearly three months.
So we are yet to reach step one of ending the conflict. And if you’re in Saudi Arabia, or depending on Saudi crude, that’s probably the worst of all outcomes.
