Background

On 14 September, the Abqaiq and Khurais oil facilities in Saudi Arabia’s Eastern Province were attacked. Seven cruise missiles and 18 suspected Iranian delta-wing unmanned aerial vehicles were used to target the two facilities, which are located more than 180 km apart. The incident caused significant damage to the facilities, halting nearly half of Saudi Arabia’s oil production. The Yemen-based Houthi movement, which is backed by Iran, has since claimed responsibility for the attack.

While Houthi drone and missile attacks on Saudi Arabia are common, the US and Saudi Arabia – later joined by France, Germany, and the UK – have asserted that Iran was behind the attack. In a press conference held on 18 September, the Saudi Defence Ministry presented findings from a military investigation into the incident, stating the attack was “unquestionably sponsored by Iran”. Although Iran has denied responsibility, the incident will likely see ongoing geopolitical tensions in the Middle East become further strained

Iran's Game Plan, A Double-Edged Sword

In November 2018, the US re-imposed sanctions targeting Iran’s oil and gas sector. In response, Iran has adopted a strategy of brinkmanship in the Arabian Gulf with the likely aim of forcing the US to shift its policies. Besides supporting anti-US/Saudi proxies in Iraq and Yemen, direct Iranian actions include the retaliatory seizure of oil tankers, following the interdiction of Iranian-flagged vessels, and the harassment of maritime traffic in the Arabian Gulf. Iran is also accelerating the country’s nuclear activity, despite the efforts of some European countries to keep the Iran nuclear deal, known as the Joint Comprehensive Plan of Action, alive. Iran likely hopes to yield more favourable negotiating terms through these actions, pushing for the removal of sanction once it perceives that conditions are ripe for initiating talks. It is doing so despite the associated risk of incurring US or Saudi retaliation. But given that Iran’s long-term alternative is further economic devastation and potential domestic upheaval, a risky game of brinkmanship will likely be favoured.

An 'All-Out War'? Feasible, Just Not Yet

The latest attack against the Saudi oil facilities will inevitably escalate regional tensions, and there is substantial uncertainty over how these tensions will develop in the coming days. However, despite the direct naming of Iran in these attacks, both Saudi Arabia and the US appear hesitant to confront Iran militarily. 

In the immediate aftermath of the attack, President Trump implied that a military response is possible if Iran is found to be directly responsible for the strike. The president has since tempered his rhetoric, stating that the US “would certainly like to avoid” war. Trump has used this about-turn approach several times over the past year – threatening Iran militarily but also stressing that the US does not want to initiate an armed conflict. This was most overtly displayed in June, when he gave initial approval for airstrikes in retaliation for Iran shooting down a US drone, before calling off the strikes last-minute. 

Saudi Arabia also appears reluctant to engage in a war with Iran. It is already embroiled in a major conflict in Yemen. Another war could prove costly, especially at a time when Saudi Arabia is trying to attract more foreign direct investment. 

An outbreak of war is unlikely in the immediate term; but there is still room for escalation. While the US and Saudi Arabia have not publicly set red lines, they may calculate that the loss of Saudi/US life in a direct Iranian attack is the only trigger for taking direct military action. Also, more attacks similar to the 14 September incident could eventually prompt them to carry out strikes inside Iran. However, this move will probably be undertaken as a last resort. 

Instead, the US will likely continue to impose economic and political pressure on Iran. Given Saudi Arabia’s constraints, the kingdom will probably prefer to attack Iran indirectly by hitting one of its proxies in Yemen, Syria or even Iraq. 

Iran, on the other hand, will respond to more pressure with increased defiance, banking on its calculation that the US and Saudi Arabia want to avoid a major conflict. It will persist in encouraging the Houthis to stage more drone and missile attacks on Saudi Arabia. It will also continue to flex military muscle in the Strait of Hormuz. Furthermore, Iran could urge its proxies to target US interests in Iraq and Lebanon. 

What is certain, however, is that Iran, Saudi Arabia and the US face difficult choices in the coming days, ones that could either result in, or avoid, igniting a broader conflict. Any miscalculation on the part of these key actors could swiftly prompt a further escalation.