Saudi Arabia's dilemma as it tries to stay out of US-Iran war
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- Saudi Arabia carried out joint strikes with the US on Iranian proxy militias in Iraq this week, after suffering attacks from three sides — drones from Iraqi militias to the north, Houthi attacks from Yemen to the south, and Iranian action in the Strait of Hormuz.
- The Popular Mobilisation Forces in Iraq have allegedly launched 30 drone strikes on Saudi Arabia, prompting the first Saudi retaliatory action and a strike Monday on the Abqaiq oil facility, previously knocked offline for several days after a September 2019 attack.
- Iran retaliated against February US-Israeli strikes by closing the Strait of Hormuz, through which 20% of the world's oil and LNG normally travels; Saudi Arabia responded by pumping ~5 million barrels/day east-to-west through its Yanbu terminal on the Red Sea.
- The Houthis retaliated for a July 13 Saudi airstrike on Sanaa airport by hitting Saudi airports at Abha and Jizan and beginning attacks on shipping in the Red Sea's Bab El Mandeb strait, choking off the Yanbu export route that replaced Strait of Hormuz traffic.
- Crown Prince Mohammed Bin Salman's Vision 2030 plan to diversify beyond oil and attract foreign investment into infrastructure like data centres is threatened by the long-term vulnerability now demonstrated across Saudi oil facilities, airports, and shipping lanes.
- Saudi Arabia spent seven years bombing the Houthis into submission and failed, agreeing to an uneasy truce in 2022 that reportedly included payoffs — a track record the article highlights as evidence that military escalation may not produce the deterrent Riyadh wants.
Why it matters: Saudi Arabia's diversification push under Vision 2030 requires foreign capital to flow into infrastructure like data centres and non-oil industries — investment that stalls if the Kingdom's oil facilities, airports, and Red Sea export routes remain under sustained drone and missile threat. The September 2019 Abqaiq precedent knocked half of Saudi oil exports offline for several days, and Monday's new strike on the same facility shows the pattern has resumed against a Saudi economy now structured around attracting outside investors.
