Yemen Strike on Saudi Oil facility and its Imapct on Oil Prices

The self-fulfilling prophecy of Modi Bhakts paying 100 rupees per liter of petrol to see Modi in power might come true very soon.

The self-fulfilling prophecy of Modi Bhakts paying 100 rupees per liter of petrol to see Modi in power might come true very soon.

Despite the low crude oil prices in the international markets since Modi came to power, the government is selling petrol and diesel at a high price to Indian consumers. For almost half a decade, the record low crude oil prices are set to increase with the latest events unfolding in Saudi Arabia.

Two oil processing plants at Abqaiq (World’s Largest) and Khurais in Saudi Arabia have been hit by drones from the Houthi rebels of Yemen. Due to this attack, oil prices have seen a record 20% jump. This is the second time in the history that such a jump in oil prices is seen since the Jan 14, 1991, Gulf War. The oil prices are expected to rise above 100 dollars per barrel from the present ~54 dollars per barrel.

On September 14th drones or cruise missile fired by Yemeni Houthis has lit the world’s biggest oil stabilization facility at Abqaiq on fire.

The stabilization process is a form of partial distillation which sweetens “sour” crude oil (removes the hydrogen sulfide) and reduces vapour pressure, thereby making the crude oil safe for shipment in tankers. This Saudi State-owned Aramco’s oil and gas processing station is the world’s largest oil processing station which handles the world’s largest conventional oilfield, the supergiant Ghawar, and exports to terminals Ras Tanura and gas (the world’s biggest offshore oil loading facility) and Juaymah. Abqaiq processes 6.8 million barrels of crude oil each day. More than two-thirds of all Saudi oil and gas production runs through it.

The second target of the attack was Khurais with the processing capacity of 1.8 million barrels a day situated near the country’s second-largest oil field. Both installations were more than 1,000 km from Yemen. It is not clear yet how much of the facility was damaged or destroyed through 17 locations of the Abqaiq plant were on fire.

Yemen, one of the poorest countries in the world, facing the brutal wrath of war unleashed by Saudi Arabia and UAE aided by western weaponry since 2015 is claiming responsibility of the attack. More than two-thirds of the Yemen population are displaced and on the verge of severe malnutrition due to Saudi led bombing and blockade of Yemen.

US response

America and Saudi led coalition against Iran are using this opportunity to blame and increase its hostility towards Iran using the latest attacks. The American secretary of state Mike Pompeo has squarely blamed the attack on Iran followed by Trump tweeting the same. One American senator has even suggested bombing Iranian oil fields. Iranian Foreign Minister MJ Zarif blasted Pompeo’s claims on Sunday, accusing the US of switching from its “failed” policy of “maximum pressure” to one of “maximum deceit” by blaming Iran for the Houthis’ attacks. Russia and China have expressed serious concerns over attacks on Saudi and have warned against rushing to conclusions. The Russian and Chinese foreign ministry spokespersons have also stated that this American overt military talk without proper investigation and evidence is unacceptable.

The Foreign Ministry of Russia also stated that the attacks were a “direct consequence of the continuing crisis in Yemen,” namely the civil war and the Saudi-led military operation in that country which began in 2015. Mohammed al-Bukhaiti, a member of the Houthis’ Supreme Political Council, has stated Saudi Arabia declared war against Yemen on the grounds that our missile inventory posed a threat to its security. Today, we are surprised to see that when we hit Saudi oil wells, they exonerate Yemen from conducting these strikes and accuse others of doing them. This is viewed as an own criminal decree of conviction. It also shows their cowardice,”

The unilateral and illegitimate sanctions against Iran and subsequently against Venezuela came into effect from last November. Since then the two crisis has pushed the world towards instability in the oil market already. India under American pressure stopped purchasing crude oil from Iran from April 2019. So, India will be affected maximum in this crisis as it is caught between American lies on promised Saudi oil and its betrayal to Iran. While the Indian public will face problems in increased oil prices and subsequent price rise in trading goods, we will also see the increase in the jingoistic pitch to protect any questions to be raised to Mr, Modi and his ministers.

With the overall economy slowing down, diminishing growth indicators and massive unemployment, this oil price rise will literally be adding fuel to fire!

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June 2024
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