Iran Just Knocked Out Half Of Saudi Arabia’s Oil Production

Drone attacks have temporarily destroyed half of Saudi Arabia’s oil capacity. Houthi rebels in Yemen have claimed responsibility for the two attacks which left Saudi oil facilities in flames and knocked out production of 5.7 million barrels of oil and natural gas per day. The loss of production is equivalent to five percent of the world’s oil capacity.

Per CNN, Houthis said that they attacked two facilities of Aramco, the Saudi state-owned oil company, at  Abqaiq and Khurais. The attacks reportedly involved 10 drones and left the oil facilities in flames. The Saudis said that the fires were under control. It is not known how long oil production will be affected by the attacks.

Oil prices will probably rise when markets open next week. "Abqaiq is perhaps the most critical facility in the world for oil supply. Oil prices will jump on this attack," Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University, said in a statement.

"Sanctioned Iran supplies are another source of potential additional oil," Bordoff said. "But [US President Donald] Trump has already shown he is willing to pursue a maximum pressure campaign even when oil prices spike. If anything, the risk of tit-for-tat regional escalation that pushes oil prices even higher has gone up significantly."

US Secretary of State Mike Pompeo blamed the attacks on Iran in a tweet, saying, “Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply.  There is no evidence the attacks came from Yemen.”

https://twitter.com/SecPompeo/status/1172963090746548225?s=20

While Pompeo did not cite evidence that Iran was behind the attacks, Iran has long used the Houthis as a proxy in their cold war with the Saudis. The cold war turned hot in 2015 when Saudi Arabia intervened on behalf of the government in the Yemeni civil war. The Houthi rebels, who are predominantly Shia Muslims, are backed by Iran and were in danger of taking over the country which borders Saudi Arabia at the southern tip of the Arabian Peninsula. The Saudis, who are Sunni Muslims, led a multinational coalition to aid the Yemeni government. At the time, the Saudis predicted that the fighting would only last a few months, but the war is still ongoing four years later.

The new unrest in the Middle East could affect the US in a couple of ways. First, the blow to global oil supplies is likely to drive up oil prices. Uncertainty about the future of Middle East oil production could also cause prices to go higher. With signs that the US and global economies are already slowing, higher energy costs could further slow growth.

If the attacks can be firmly linked to Iran, Saudi Arabia and the US may reciprocate with reprisals. In June, President Trump approved and then canceled an attack on Iran after the Iranians attacked several ships in the Persian Gulf.

There seem to be few options for a response to the attack. Iran seems determined to cause a confrontation. Their past behavior indicates that if the Saudis and the US do not take action then the Iranians will ratchet up their aggressive behavior.

After President Trump’s abortive attack and recent revelations that he may be considering extending a $15 billion credit line to Iran if the nation comes back into compliance with President Obama’s nuclear deal, which President Trump canceled in 2018, the Iranians almost certainly view Trump as a weak and indecisive leader and are seeking to find out how far they can push him. Since the rise of the Ayatollah Khomeini in 1979, Iran has had little love for Americans and Trump’s rejection of the nuclear deal was like a slap in the face.

The attack on Saudi oil production is one of those stories that is easy to overlook amid concerns about whether Beto O’Rourke’s threat to confiscate AR-15s and the culture wars about gender and abortion, but it may ultimately be of much greater importance than most topics being discussed. The event could impact the US and the world in much the same way as Saddam Hussein’s 1990 invasion of a small Middle Eastern country that most Americans had never heard of.

President Trump does not want war with Iran. The president is essentially an isolationist who wants to bring American soldiers home rather than dispatching them to a new front. War with Iran, if it did not reach a rapid and successful conclusion, would also complicate President Trump’s reelection campaign. The problem for Trump is that the Iranians sense that he does not want war and realize that this gives them an opportunity to run amok.

Taking military action against Iran runs the risk of igniting the Middle East in a regional war that could end up as another Iraq or Afghanistan. Not taking action is also risky, however. If Iran is allowed to act with impunity, the rogue nation will only be encouraged to continue its aggression.

Originally published on The Resurgent

Iran Says 'No Deal Left' If US Leaves Nuclear Agreement

Amid the recent speculation that President Trump will not continue the Obama nuclear deal with Iran, the stakes have just gotten higher. An Iranian representative ruled out modifications to the deal and say that if the US withdraws from the agreement, “it means that there is no deal left.”

Hamid Baeidinejad, Iran’s ambassador to the UK, told CNN’s Christiane Amanpour, “The consequence would be that Iran would in fact be ready to go back to the previous situation.”

The ambassador further explained, “It could be enriching uranium, it could be redefining our cooperation with the agency [IAEA], and some other activities that are under consideration.”

President Trump has suggested that the Iran deal is flawed and needs to be renegotiated, but Baeidinejad rejected that possibility as “totally unacceptable.”

“JCPOA [Joint Comprehensive Plan of Action, the formal name for the Iran deal] was negotiated on its own merits, and still it's working and it should be continued to be enforced,” he said.

In response to Israeli Prime Minister Benjamin Netanyahu’s allegations that Iran has been “brazenly lying” about complying with the deal, Baeidinejad said, “There have been some allegations against conducting of such activities in Iran, but never was there ever any proof presented to Iran.”

Under the terms of the deal, the president must certify to Congress every 90 days that Iran is in compliance. The deal gave Iran sanctions relief in exchange for reducing Iran’s ability to create plutonium and uranium, two key components of nuclear weapons. The deal’s 10-year sunset clause is one of its most controversial aspects.

In October 2017, Trump decertified Iran’s participation, but did not withdraw the US from the agreement. In January 2018, the president again continued the deal, but said that absent “fixing significant flaws in the deal… the United States will not again waive sanctions in order to stay in the Iran nuclear deal.”

Withdrawing from the Iran nuclear deal may complicate the ability of the Trump Administration to make a similar deal with North Korea. If the US pulls out of the Iran deal without sufficient justification, North Korea could be hesitant to enter into a new deal.

President Trump told reporters, “I think it [threatening Iran] sends the right message” to North Korea.

“In seven years that deal will have expired, and Iran is free to go ahead and create nuclear weapons,” the president said. “That's not acceptable.”

President Trump must make a decision on whether to certify and continue the Iran deal by May 12.

Originally published on The Resurgent

Trump Decides to Decertify Iran Deal

Donald Trump spent a great deal of time campaigning against Barack Obama’s nuclear deal with Iran. Nine months into the Trump Administration, the rubber on the Iran deal is about to meet the road. President Trump must decide by Oct. 15 whether to certify to Congress that Iran is in compliance with the terms of the deal. Under US law, the president must certify Iran’s fulfillment of the deal to Congress every 90 days. Trump has made the certification twice, but there are indications that this time may be different.

The president told reporters on Wednesday that he had made up his mind about the deal, but declined to reveal his decision. Trump is keeping his cards close, telling reporters, “I’ll let you know what the decision is,” but without saying when he would do so. Politico reported that the president even declined to share his decision with British Prime Minister Teresa May.

NBC News reports that the president is leaning toward decertifying Iran’s compliance with the deal, citing four unnamed sources within the White House. The sources indicate that the president has resolved to change the “status quo.”

If the president decertifies Iran’s compliance with the deal, it would not necessarily mean that the entire deal would be scrapped. NBC’s sources indicate that the president would use the decertification to attempt to persuade the European partners to renegotiate the deal. At this point, Britain, France and Germany are strongly opposed to ending the deal.

There are other options if the president decertifies the deal as well. If the president decertifies the deal, then Congress will have 60 days to decide whether to impose sanctions on Iran. The president could also choose to withdraw from the deal entirely as Ambassador John Bolton has urged.

Trump’s position is awkward. The president has spoken out strongly against the treaty, but Secretary of State Rex Tillerson said Wednesday, “Perhaps the technical aspects have (been met), but in the broader context the aspiration has not.” Tillerson said that reports from the International Atomic Energy Agency “continue to confirm that Iran is in technical compliance with the agreement.” A common complaint is the fact that Iran continues to test ballistic missiles, which are not covered under the agreement.

President Trump’s decision will be closely watched by North Korea, where the president is currently engaging Kim Jong Un in a tit-for-tat over the country’s missile tests. How the president handles the agreement with Iran will almost certainly impact the resolution of the North Korean problem.

Whatever direction Trump is leaning now, nothing is certain until a formal announcement is made. Last spring, the president reportedly changed his mind on withdrawing from NAFTA at the last minute. More recently, the president’s commitment to withdrawing from the Paris climate treaty and his hardline immigration policy have been called into question as well.

Time will tell how strong President Trump’s resolve to confront Iran is and which faction of White House advisors have his ear. 

Originally published on The Resurgent