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May
24
2019

Beware of Saudi/UAE Reports of Oil Tanker “Sabotage”
Tom Kirkman

In the span of several days, Saudi Arabia has claimed that two of its oil tankers and a pipeline have been attacked, with the clear implication being that Iran was responsible. The initial reports of a “sabotage attack” on two Saudi oil tankers off the UAE coast (near the Strait of Hormuz) came out of the UAE on Sunday. There have been no details about these attacks, and no evidence whatsoever, with the Saudis saying only that there has been structural damage. Then, on Tuesday, the Saudis said that drones targeted two oil pumping stations along its East-West pipeline, forcing Aramco to halt pumping to evaluate the damage. Output and exports continued without disruption, nonetheless.

The drone attack on the Saudi pipeline has been claimed by Yemen’s Houthis, who align with Iran in what is essentially a proxy war between Saudi Arabia and Iran in Yemen. There is no clear evidence of the alleged attack on the Saudi oil vessels off the UAE coast, but oil prices rose on speculation regardless. Satellite imagery of the vessels does not show any damage, and our assessment of Houthi weaponry suggests that they wouldn’t have reached this area of the coast, nor would they have launched such an attack without claiming it.

The Iranians are using the threat of withdrawing entirely from the nuclear deal to leverage Europe to find a way around US sanctions. It’s a game of leverage that Iran won’t win because Europe is too weak to make it happen. Regardless of this escalation, it is simply not in Iran’s interest to take pot shots at Saudi oil tankers. Iran’s only move in the Gulf right now would be a show of naval force against the US, which it will not do at present. Iran views all US moves right now as psychological warfare, and it’s not biting.

The danger here comes in the form of warmongering in Washington, where administration officials are keen to suggest that Iran is openly attacking Saudi oil destined for the United States at a time when the US is trying to make a show of force in the Gulf against Iran, readying warships to Israel’s delight. There is no point whatsoever in Iran launching a secret sabotage attack of this low-level nature on Saudi vessels. This was almost certainly not the work of Iran. All other actors in this incident would have far more to gain by such an attack, for which there is still no evidence.

Also, beware of any evidence that emerges in the coming days concerning any weapons that may have been used in these attacks. Any attempt to link up that weaponry to a specific actor is irrelevant. The Saudis and the UAE have been arming al-Qaida in Yemen, with US weapons, which have also made their way into the hands of Yemen’s Iran-backed Houthi. There is a bonanza of weaponry floating around this region and it is just as feasible that the Saudis could be attacked with American weapons.

While the US is using the alleged attack on Saudi oil tankers as a springboard to move against Iran, this attack is more likely the work of a US ally and not an Iranian proxy. This will be a war of fake intelligence. It is also an extremely dangerous 2020 election campaign stunt that goes far beyond the last war game in Iraq.

For investors, the media coverage of this event is a minefield. In an attempt to do damage control for MBS after the Khashoggi affair, the Saudis have seen a senior PR advisor (Richard Minz) drop them as a client. Mintz was grooming the crown prince’s brother, Khalid, on ‘behavior’ as ambassador to the US. The remaining big-name PR lobbyist is Michael Petruzello. But in the meantime, the PR arm of MBS is putting together a master list of journalists (with an eye to the West) who are ranked as friends and foes, with the former further ranked in terms of the level of willingness to engage (i.e. willingness to sell the Saudi story). This document has not yet leaked, but when it does it will be a circus because it will basically lay out which journalists have been bought by Saudi money. And that is only part of the media campaign: Both the Saudis and UAE control an army of social media bots through accounts they acquired from dead people. They use these bots to control their messages against Qatar and Senator Lindsay Graham, as well as other enemies, according to our sources, including an Israeli former intelligence source and a DC lobbyist. Be careful what you consume in the media blitz on this one.

 

Hope this doesn't get me into hot water, but I am going to share the beginning excerpt from a current Oil Price Editorial, which is only available to Premium subscribers. I am sharing because this Editorial message has some important messages of caution, and remarkably enough, I happen to agree with the general gist of the caution presented here, with the information I have seen so far from a wide variety of sources.  Dead on accurate Editorial, in my view.  (Yes, I know, I am highly opinionated; as always, you are free to disagree.)

 

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