Saudi Arabia on Sept. 14 suffered its most significant attack since armed militants ambushed the Grand Mosque in Mecca nearly 40 years ago. The 1979 Grand Mosque seizure shaped Saudi Arabia's strategic perception of the world and its rivalry with Iran, and the recent strike on the kingdom's Abqaiq and Khurais oil processing facilities will do the same; the question is how.
To protect its vital oil sector, Saudi Arabia is undoubtedly mulling several different options for escalation and de-escalation with Iran. Based on the powerful Crown Prince Mohammed bin Salman's past actions and his outspoken criticism of Tehran, the former may be more likely.
Saudi Arabia's rivalry with Iran is a defining issue in the Middle East — spurring proxy conflict in theaters such as Yemen, while complicating diplomatic relations across the region. As the kingdom prepares its response to Iran's unprecedented attack on its oil and gas sector, Riyadh must revisit the recurrent question of whether to work with or against its neighbor across the volatile Persian Gulf.
Saudi Arabia's Regional Status Quo
Saudi Arabia's current regional strategy hinges on securing its territory and population from jihadist and anti-government threats, while defending Riyadh's leadership role in the Muslim and Arab worlds. Under King Salman and Crown Prince Mohammed bin Salman, this has entailed more visible efforts to counter Iranian influence, including greater involvement fighting Iran-backed Houthi rebels in Yemen. In its effort to contain Iranian influence, Saudi Arabia also prefers to operate under the U.S. security umbrella and work with like-minded allies — while being careful not to spark a direct conflict with Tehran.
This status quo approach, however, isn't without drawbacks. The United States has remained vigilant in its current sanctions campaign against Iran. But Washington has also sought to avoid launching a military strike in response to provocative moves by Iran, including the most recent strike on the Saudi oil sector, as well as the shootdown of a U.S. drone in June. Since the Sept. 14 strike, the United States has blacklisted Iran's central bank for its support of the Islamic Revolutionary Guard Corps and Hezbollah, organizations designated as terrorist groups by Washington. Iran's central bank is already heavily sanctioned, but the additional terrorism-related designations will curtail Tehran's ability to use the bank for humanitarian-related trade.
Within this context, Iran appears to have assessed that it can continue with its aggressive regional strategy without provoking a U.S. military response. But in doing so, Iran's endgame is not necessarily to instigate a military conflict. Rather, it's to force a change in U.S. and Saudi strategy to weaken demands on Iran. And until that happens, Saudi Arabia could face more Iran-sponsored attacks on its oil and gas sector.
Riyadh has tried to downplay the impact of the attack on its oil sector, claiming that its production capacity has already reached 11.3 million barrels per day (bpd). The most recent statement from the trading unit of Saudi Arabian Oil Co. (Saudi Aramco) also says that the state-run company's production has returned to its pre-attack levels of 9.9 billion bpd. However, initial images of the two processing plants damaged in the Sept. 14 strike suggested that Saudi Aramco's actual production was still around 8 million bpd. A full recovery of the kingdom's processing and production capacity could, in truth, take months. This means another strike on a strategic facility risks knocking out a lot more of Saudi Arabia's vital oil production — and potentially for a lot longer.
Options for Escalation
1) Direct retaliation: With its vital oil sector at stake, Saudi Arabia is almost certainly considering a more aggressive regional strategy. At the extreme end, this could entail more forcefully pushing for a U.S. military response to Iran, or even considering conducting their own strike against Iran with U.S. intelligence, targeting and surveillance support. Right now, Saudi officials have said that they are waiting on the investigation into the attacks to wrap up, though they have noted all options — including a military one — for retaliation remain on the table. Such an extreme option, however, could quickly escalate into a regional conflict that would place more Saudi oil and gas infrastructure, as well as other strategic targets, at risk of attack by Tehran.
Saudi Arabia is likely mulling several options for escalation and de-escalation to ensure against future Iranian attacks, though the former may be more likely.
2) Indirect retaliation: Should Saudi Arabia adopt a more aggressive regional strategy, it would more likely be through closely joining U.S. efforts against Iran's presence and allied militias in Syria, Iraq and Lebanon. Prior to being promoted crown prince, Mohammed bin Salman ruled out a rapprochement with Tehran in 2017, hinting that Riyadh could try to support more anti-government militant groups in Iran in places such as Ahwaz or Iranian Kurdistan. Saudi Arabia, however, has historically had limited connections to these groups, and such an approach could risk making Riyadh appear supportive of terrorist groups.
Saudi Arabia, of course, already has an aggressive regional stance against Iran. But going any further in this direction could end up mirroring Riyadh's response to the 1979 Grand Mosque attack and the Islamic Revolution in Iran. Saudi Arabia could again become deeply concerned about religiously-motivated extremists pushing for the downfall of the Saudi state influenced by Iranian calls to export its revolutionary ideals across the region. This concern dominated Riyadh's view of Iran's regional strategy for much of the 1980s, motivating the kingdom's support for Saddam Hussein (a former Saudi rival) during the Iran-Iraq war.
Options for De-escalation
1) Indirect diplomacy: Saudi Arabia could also choose to de-escalate tensions with neighboring Iran. One possible, less extreme option could be acting more pragmatically in the various proxy theaters in which Riyadh fights Iranian influence, while still refusing to reach out directly to the Iranians. This would mainly see Saudi Arabia moderate its policies in Yemen by drawing down some of its military operations in the country, while negotiating directly with the Houthi rebels to mitigate the security risk they pose to the kingdom.
Indeed, such a strategy might already be in play, with Saudi Arabia announcing a partial cease-fire in Yemen on Sept. 27. The move is unlikely to ease the overall conflict, as evidenced by the Houthis' prompt rejection of the truce and subsequent attack on pro-Saudi forces in northern Yemen. But Riyadh's olive branch — albeit small — nonetheless shows a shift in its regional calculations, and perhaps a realization that the kingdom will have to update its tactics to accomplish its political goals in the war-torn country.
To deter future attacks on its vital oil sector, Saudi Arabia is undoubtedly weighing whether its next move should be a step closer, or further, from Iran.
A more pragmatic regional strategy would align with that of some of the other Arab Gulf states, such as Kuwait and Oman. It would also see Saudi Arabia trying to accommodate and work around the presence and actions of other Iranian proxies in places where it still has political and economic interests, such as Lebanon and Iraq. The main drawback to a moderate drawdown, however, is that Iran could use the opportunity to ramp up its support for regional proxies (such as Hezbollah) and its allies (such as the Houthis) to counteract Saudi efforts.
2) Direct diplomacy: Another, more extreme de-escalation option for Saudi Arabia would be talking directly with Iran. Riyadh has opted for such an approach before as a means of risk mitigation with Tehran. Most notably, the two countries signed a comprehensive cooperation agreement in 1998 during a period of relatively peaceful relations between the two rivals. At the time, Saudi King (then-Crown Prince) Abdullah helped ease this opening, looking for options for risk mitigation with Tehran following a rough decade of cracking down on extremist movements at home, while trying to get former ally Saddam Hussein in Iraq to serve as a counterbalance to Iran.
Unlike King Abdullah, however, Crown Prince Mohammed bin Salman does not appear so keen on a moderate approach to the kingdom's Gulf neighbor — at least not right now. Despite recent statements vaguely hinting he favors resolving the kingdom's conflict with Iran, such direct negotiations would go against the hardline strategy Mohammed bin Salman has backed for years. It also wouldn't align with Saudi Arabia's current coalition-building strategy with regional actors who share its concerns about Iran. In the late 1990s, the United Arab Emirates disagreed with Saudi efforts to moderate with Tehran; and it could do so again, spurring a rift between the two most powerful countries in the Gulf.
Perhaps most important, the United States would also likely oppose a sharp Saudi de-escalation with Iran. Indeed, driving a wedge between Washington and Riyadh may be part of the thinking behind Tehran's recent aggression. The fact of the matter is that as long as the United States maintains its pressure campaign against Iran, Tehran will need nearby targets to attack in retaliation. And there's no better way to get Washington's attention than by a direct hit on one of its closest regional allies and one of the world's largest oil producers. Thus, even if Saudi Arabia adopted such a unilateral strategy, anything short of a drastic reversal of the kingdom's current anti-Iran strategy will likely keep Riyadh — and its oil industry — in Iran's crosshairs.