September 16, 2019
The attack on Saudi oil facilities by ‘suicide drones’ at the weekend is having the predictable effect on oil prices and President Trump has authorised some release from the Strategic Oil Reserves, an important but not unprecedented move. (See here for a fascinating article about suicide drones from earlier this year, as well as a lot of background about this largely unreported conflict https://abaadstudies.org/news-59795.html ). The attack does of course also raise further questions about the float of Saudi Aramco. The recent replacement of the Saudi Oil Minister Kalid al-Falih with Abdulaziz bin Salman, half brother of Crown Prince MBS was seen as an acceleration of the process of selling off a stake in Aramco, but that now looks unlikely until and unless the Yemen situation is solved. Having said that, if Oil prices remain elevated then the need to sell Aramco goes away. Meanwhile, the pressure is eased on all the highly leveraged fracking operations in the US, as well as benefitting Russia and Iran.
There have in fact already been signs that the Saudi’s were looking to negotiate a peace, not least because they appear to have fallen out with their Gulf Allies in the region and the realisation that all the expensive foreign military hardware failed to protect their vital strategic asset must be causing serious consternation in Saudi circles. This new asymmetric warfare, where traditional multi billion dollar weapons systems can be challenged by a computer hack or drones costing only a few thousand pounds is of course also a concern to the Military Industrial Complex