Mideast Oil and Military Deterrence

The US and Iran both appear to be seeking to de-escalate in the aftermath of the assassination of Gen. Qassem Soleimani, a senior officer in the Islamic Revolutionary Guard Corps, and the Iranian retaliatory attack against US facilities in Iraq. Soleimani is believed to have been the strategic brains behind the attacks last year on Saudi oil targets and on oil tankers at the Strait of Hormuz, and there was concern that in avenging his death Iran may seek to replicate those attacks, or worse. These concerns have made oil markets extremely anxious about the impact an escalating US-Iranian conflict will have on global oil supply. While the threat of armed conflict between the US and Iran remains very real, neither side wants a scenario where the oil and gas production capacity of the region is permanently impacted. The sobering reality of the devastating consequences of a war that targets energy production serves as the best hope that a wider conflict between the US and Iran can be avoided. Nevertheless, the risks and uncertainties remain high in this new environment.

The September 2019 attacks by armed drones on Saudi Arabian oil production and processing facilities at Khurais and Abqaiq sent shock waves throughout the global energy market, highlighting the extreme vulnerability of strategically vital infrastructure to attack. Even after spending billions of dollars on defenses, oil producing nations like Saudi Arabia were exposed as impotent when it comes to protecting their nation’s lifeblood from modern offensive weapons. Whether originating from Houthi rebels operating from Yemen, Iranian forces operating from some yet-disclosed base in the region, Iranian proxies operating out of Iraq, or some combination thereof, the Sep. 14 attacks put every oil producing nation in the Gulf region on notice that they, too, could befall a similar fate.

Iran is widely assumed to be the political power behind the September attacks, whether or not it actually launched them. The same holds true regarding a series of attacks targeting oil tankers in and around the Strait of Hormuz, and oil pipeline infrastructure in Saudi Arabia. The message Iran was sending was that if its oil production capability — which is every bit as critical to its national economy as it is to the Gulf’s Arab states — was curtailed as a result of US-backed economic sanctions then so would everyone else in the region. The message was received. The US did not retaliate militarily against Iran and its oil facilities after the Saudi Aramco attacks, and Iran did not again hit Saudi oil and gas facilities in response to the US assassination of Soleimani. However, if the US had opted to retaliate militarily against the recent Iranian missile attack on its bases in Iraq, Iran had threatened that it would seek revenge by repeating the Saudi oil attacks on an even grander scale.

Oil and Gas as Deterrence

As cognizant as the Saudis and their Gulf Arab neighbors are about the extreme vulnerability of their oil and gas production systems, so, too, is Iran. The US could destroy the totality of Iran’s oil production capacity in short order. While the impact on global markets and the global economy of major damage to Mideast oil production would be severe and long-lasting, the consequences for Iran, Saudi Arabia and the Gulf Arab states would be fatal regarding their abilities to function as modern nation states. Iran knows this about itself, and the US understands this about its Arab allies. Any military conflict that targets oil and gas production, processing and transportation would be an exercise in mutual suicide. It serves the interest of no one.

This does not mean there is no risk of a war between Iran and the US. On the contrary, the assassination of Soleimani was an act of war, as were the Iranian missile attacks in response. The raising of a red flag, symbolizing revenge, over the Jamkaran mosque in Iran’s holy city of Qom, represents far more than a mere exercise in propaganda. It indicates that Iran’s inner circle firmly believes a state of war already exists between the US and Iran. While both Iran and the US appear to be seeking a diplomatic off-ramp from the current round of violence, this by no means indicates that the underlying issues that fuel tensions between these two nations have been resolved.

Risks of Wider War

In his televised address to the American people following the Iranian retaliatory missile attack, US President Donald Trump laid out a list of concerns that the US continues to maintain regarding Iran’s “malign activities.” First and foremost was Iran’s nuclear program. This was followed by Iran’s ballistic missile programs — which demonstrated their efficacy in Iraq, where satellite images show precision strikes against targets specifically chosen to reduce the risk of casualties. Also on the list were Iran’s recent attacks against oil-related targets in the Middle East, and its ongoing support for Hezbollah in Lebanon, the Houthi in Yemen, and various proxy militias throughout the region. Trump’s list is the same as the list of US concerns that existed prior to the recent escalation of violence prompted by the Soleimani assassination. In short, nothing has fundamentally changed when it comes to defining the four corners of the current US-Iranian dispute.

Back in May 2019, when the Iranians shot down a US reconnaissance drone over the Strait of Hormuz, Trump held a meeting with senior officials from the Pentagon to discuss potential military retaliation. At that time, Trump was advised that any attack on Iran could very well trigger a massive response by Iran that would include vital oil and gas production and supporting infrastructure belonging to US allies in the region, including Saudi Arabia. While the US had significant military resources deployed to the region, these forces were not enough to either deter Iranian attacks or prevail in any full-scale conflict that might occur. The costs of a military buildup of the size and scope necessary to prevail in a major confrontation with Iran are huge, and the time needed to assemble this capability would be measured in months. In short, the US was not prepared for a major war with Iran.

Very little has changed in the intervening time that would fundamentally alter this equation. There have been defensive deployments of Patriot anti-missile units by the US into Saudi Arabia, a repositioning of combat aircraft in the area, including a recent deployment of US heavy bombers to Diego Garcia in the Indian Ocean, and the dispatch of thousands of US soldiers to Kuwait. But in terms of the kind of actual offensive military power needed to sustain a conflict with Iran, these forces are wanting. Indeed, they increase potential targets for Iran to consider for any future retaliatory action.

Strategic Victory in Iraq

Adding further complexity is the ongoing situation inside Iraq. The assassination of Soleimani has served as the impetus for a vote by the Iraqi parliament to expel all foreign troops from the soil of Iraq, including those belonging to the US. While the US struggles to craft a response to this development, this new situation presents Iran with a strategic victory that was previously unimaginable. From this perspective, the Iranian decision to provide Iraq advance notice of its missile attacks and to purposefully target locations that provided proof of capability without triggering a massive US military response makes sense. A harsher retaliatory attack in Iraq could have undermined the potential gains for Iran from the now likely departure of US troops.

There remains a great deal of uncertainty as to how events will unfold in the Middle East in a post-Soleimani world. The US has set in motion events that will severely diminish its overall position in the Middle East. The complete retreat from Iraq of US military forces, and the accompanying reduction in US political influence in that country, is all but inevitable. Likewise, sustaining the US military posture in Syria becomes problematic if not impossible. Even the long-term viability of the US air force base at Al-Udeid, in Qatar, and the status of the US Navy’s 5th Fleet in Bahrain are in doubt. How the US adjusts to this new reality — whether through a gradual drawdown that emphasizes stability and security, or in a more disruptive fashion — is currently unknowable.

One thing is for certain — the conditions that underpinned the decision by Trump to assassinate Soleimani, and the determination of Iran in retaliating, still exist. One can only hope that the global economic disaster that would occur should a US-Iranian conflict expand to include regional oil and gas production capacity serves as a mutual deterrent to both nations as they move forward.

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