Category Archives: Saudi Arabia

Britain, Economic, Government, Iran, Politics, Russia, Saudi Arabia, Society, United States

A winter of global discontent beckons

GLOBAL ECONOMY

Intro: As energy and food prices soar, we face a winter of global discontent facilitated by the West being run by failures of truly historic proportions

Houthi rebel forces have swept down the western coast of Yemen, seizing the strategic Red Sea port of Mokha (long renowned for its global coffee trade) then Dhubab, another port, before taking Perim Island at the mouth of the narrow Bab al-Mandab Strait that connects the southern end of the Red Sea to the Indian Ocean.

Many will say these are far off places of which we know nothing and care even less.

Perhaps. But what has just happened there is about to hit us even harder at the petrol and diesel pumps, the supermarket checkout counter, in monthly mortgage payments, bank loans, and household food and energy bills. Bab al-Mandab is Arabic for “The Gate of Grief” – and grief is what the global economy is in for this winter.

Oil and gas prices have already soared since Donald Trump’s war on Iran resulting in Tehran seizing control of the Strait of Hormuz, a development the President managed somehow not to foresee.

Since then the US Navy has been deployed to wrestle back control, with mixed results.

Before Trump attacked Iran, around 25 per cent of global seaborne oil trade passed through the Strait of Hormuz and 20 per cent of global liquified natural gas (LNG). Oil flows are now less than half of that (perhaps no more than a third) and almost no LNG at all is getting out.

It’s hardly surprising, then, that oil and gas prices have soared. But nothing like the trebling and quadrupling of prices in previous energy crunches: that’s because several workarounds were instigated, none more important than the East-West pipeline from Saudi Arabia’s oil field heartlands to the oil port of Yanbu on the Red Sea.

The Saudis built this 750-mile pipeline in the 1980s, as the Iran-Iraq war was raging, precisely as a contingency for the Strait of Hormuz being shut. This year it became the most important piece of energy infrastructure in the world, its daily capacity of 7 million barrels doing its bit to mitigate the rise in oil prices.

No longer. Which brings us back to the Houthis.

Just as the Islamic Revolutionary Guard Corps (IRGC) threatened all vessels trying to transit the Strait of Hormuz, so the Houthis, Shia insurgents funded and armed by the IRGC, now threaten all shipping attempting to pass through the southern exit of the Red Sea.

The two most crucial maritime chokepoints in the world are now under the thumb of a hardline Iranian regime and a proxy doing its bidding. It would be hard to think of a more disastrous outcome from Trump’s war on Iran. But there’s worse.

As the Houthis pushed south to take control of Bab al-Mandab, the Saudi East-West pipeline came under attack from drones dispatched by Iraqi Shia militia, yet more Iranian proxies.

Even the dim-witted can surely see a pattern here.

The drones took out pumping stations, forcing the Saudis to close the pipeline for at least six weeks for repairs. This has crippled Saudi oil exports in the process, a harbinger of the global spike in oil prices to come.

This week the benchmark Brent crude oil price hit almost $110, the highest since May, before falling back a bit. Aramco, the Saudi national oil giant, told European refineries there would be no deliveries next month. The prices of what’s refined from crude oil – jet fuel, petrol, diesel – are rising fast.

Tehran has, in effect, opened a second front in its war with America, with huge consequences for the global economy – and Trump, still struggling to escape from the first front (which he started), has no idea what to do about it.

The Saudi crown prince, Mohammed bin Salman, has pleaded with the US President for military help to repel the Houthis. Washington will likely be reluctant to assist, mindful that the Houthis survived a massive US bombing campaign, lasting over 50 days and involving 1,000 airstrikes, in the spring of 2025.

The Saudis are certainly in no position to dislodge the Houthis on their own. The group already controls a big chunk of northern Yemen, including the capital, Sanaa, despite previous Saudi military interventions on behalf of the beleaguered Yemeni government.

Now that the Houthis have their foot on the Saudi oil-export windpipe, they are going nowhere fast.

TWO

Sometimes it really doesn’t rain but it pours. The coming global energy crunch will be compounded by the fact that Ukrainian drones have taken out a third of Russian diesel-refining capacity. Russia is now having to import diesel from India, pushing up global prices even further.

Russia is retaliating by sending its drones to hit Ukrainian grain infrastructure and exports going through the Black Sea, seriously hindering the amount of grain getting out from one of the world’s great bread baskets.

It’s a prelude to the soaring food prices to come. Farm machinery is powered by diesel. So that cost is rising. So is the cost of fertiliser. Around 20 per cent of global supply used to come through the Strait of Hormuz. Not now. The upward pressure on food prices will become relentless.

Suddenly we’re looking at the prospect of soaring energy and food prices, as oil and grain markets buckle. A new broad-based inflationary surge is coming down the pike.

The Bloomberg commodity index has already risen by 48 per cent this year. That’s now working its way into consumer prices.

UK inflation is back over 3 per cent – with more rises to come. European gas reserves are at historic lows, with time running out to replenish them for winter. So, gas is about to become much more expensive, too.

OFGEM’s energy price cap is forecast to rise by as much as 25 per cent in January.

We are now moving into a world of higher interest rates. The European Central Bank increased its benchmark rate last week; the US Federal Reserve did the same just days ago. The Bank of England kept its rate on hold. But it’s only a matter of time before it starts raising rates too. Now that inflation is back, it will have no other choice.

We are looking at higher interest rates for as far as the eye can see. The chance of reviving the housing market is non-existent. While all this unfolds, politicians on both sides of the Atlantic debate and promise irrelevancies while ignoring what really matters.

Britain has been consumed by rows over political donations which in the grand scheme of things barely matter a jot, but allow politicians to posture at their hypocritical worst.

America has a President – who’s caused much of the global economy’s turmoil – trying to bribe voters with a $5,000-a-head “dividend”. France has a lame-duck President who talks a lot and does nothing as his country sinks into a fiscal morass.

German Chancellor Friedrich Merz might not survive next week following a series of bad results in elections.

The markets, of course, know exactly what’s happening. Inflation is coming back with a vengeance, the war on Iran is being lost, and the global economy is at the mercy of Islamists bent on our destruction.

It should come as no surprise the bond vigilantes demand ever higher interest rates. A risky world means ever-rising risk premiums.

We face a winter of global discontent with a political leadership missing in action, obsessed with an agenda that means little and is of a self-serving discourse, wholly inadequate to the challenges about to confront us. When the IRGC and the Houthis hold the upper hand, nobody can be in any doubt we’re being run by failures of historic proportions.

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Iran, Middle East, Saudi Arabia

Water: The Gulf’s most precious resource under attack

WATER AND DESALINATION PLANTS

The Gulf states may have been built on wealth from oil, but it is another liquid – water – that keeps these desert countries running day-to-day.

Recent attacks on desalination plants in countries on both sides of the Iran war have targeted the Gulf’s most precious commodity, and threatened to weaponise a resource needed to prevent the region’s megacities from collapsing.

Just days ago, Bahrain accused Iran of damaging a desalination plant, hours after the Iranians claimed a US air strike had hit one of theirs.

Securing plentiful water in a region with almost no underground supplies or rain has been central to the vaulting ambitions of the fast-growing Gulf countries. The solution has been desalination plants, which turn seawater into drinking water for millions of people in one of the world’s driest regions.

In Kuwait, about 90 per cent of drinking water comes from desalination, along with roughly 86 per cent in Oman, and about 70 per cent in Saudi Arabia.

Everyone thinks of Saudi Arabia and their neighbours as petro-states. But, in reality, they are saltwater kingdoms. They’re human-made fossil-fuelled water superpowers. It’s both a monumental achievement of the 20th century and a certain kind of vulnerability.

Nearly half the world’s total desalination capacity is in the Gulf. The processing of water is needed not only to quench the thirst of fast-growing populations, but also for hotels, resorts, shopping centres, golf courses, and other facilities.

Yet, what has been a marvel of engineering and economic planning, has also been recognised as the dangerous vulnerability it is. Gulf governments and their allies have long warned of the risks these systems pose to regional stability.

In 2010, a CIA analysis said attacks on desalination facilities could quickly trigger national crises in several Gulf states. If critical equipment were destroyed, water processing could be halted for months.

A leaked 2008 US diplomatic cable warned that Riyadh, Saudi Arabia’s capital, “would have to evacuate within a week” if either the Jubail desalination plant on the Gulf coast, or its pipelines or associated power infrastructure were seriously damaged. The cable added that “the current structure of the Saudi government could not exist” without the plant.

Gulf states are thought to have bolstered the resilience of their desalination networks since then, but the recent air strikes have again highlighted their vulnerability.

The Iran war is not the first conflict in the region in which water-processing plants have been targeted. After Saddam Hussein’s 1990 invasion of Kuwait and the subsequent Gulf War, Iraqi forces sabotaged power stations and desalination facilities as they retreated.

At the same time, millions of barrels of crude oil were deliberately released into the Gulf, creating one of the largest oil spills in history. Workers deployed booms around the intake valves of desalination plants to prevent the vast slick from contaminating seawater-intake pipes.

The destruction left Kuwait largely without fresh water and dependent on emergency water imports. Full recovery took many years. More recently, Houthi rebels have targeted Saudi desalination facilities.

In the Gulf, desalination facilities are not merely infrastructure. They are essential lifelines that supply drinking water to millions. Striking them risks turning a military confrontation into a direct threat to civilian survival.

Iran, too, uses desalination and must deal with acute water shortages. Tehran claimed that a US air strike had damaged one of its water processing plants last weekend.

Abbas Araghchi, the foreign minister, said the strikes on Qeshm Island, in the Strait of Hormuz, had affected the water supply for 30 villages. He warned that in doing so, “the US set this precedent, not Iran”. The US military denied striking the facility.

The Institute for Strategic Studies said it was unlikely the Americans had targeted the desalination plant. However, Qeshm was essential to Iranian plans to block the strait to shipping, and was probably being targeted for other strategic reasons – such as to hit underground stocks of drones and missiles.

What seems certain, given the conflagration, is that the Americans would have been pounding Qeshm Island to take out these underground facilities where the drones and the missiles basically embodied the last strategic option, or one of the last strategic options, of Iran.

For Iran, that would’ve been a nice coincidence to create an information operation to say the Americans are targeting civilian assets. And it would justify the retaliatory attacks on desalination plants without looking like the villain.

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Britain, History, Iran, Israel, Middle East, Politics, Saudi Arabia, Society, United States

Middle East history. It needs to be understood.

MIDDLE EAST

Ancient indifferences are reshaping the Middle East and forging unlikely new alliances

GEOPOLITICAL statements come no more obscure than one given earlier this week by an Israeli news site.

A member of the Saudi Arabian royal family had reportedly told the broadcaster Kan that, in his view, Iran had started the Gaza war by instructing its proxy group Hamas to attack Israel on October 7.

Tehran’s attention, according to this nameless royal, was to thwart the imminent normalisation of diplomatic relations between Israel and the Saudis.

This is so important because it symbolises the extraordinary transformation under way in the politics of the Middle East. For a Saudi royal to express such a view – that a Muslim country instigated the conflict for the purpose of spreading discord – would have been unimaginable only a few years ago. But that’s not the only way in which the winds of change are resettling alliances in this volatile region.

Five days ago, the ayatollahs of Iran inflicted their first direct attack on Israel since they came to power in 1979.

For some 45 years, the Islamic Republic has plotted the destruction of what its Supreme Leader Ali Khamenei calls “the evil Zionist regime”. But it has left the actual attacks to its proxies, such as Hamas and Hezbollah.

This fresh assault did almost no damage, thanks to the defensive coalition that shot down almost all of the weapons directed at Israel.

The US and UK played a role in this. But they were joined by two other countries for whom defending the Jewish state would have been fanciful until recently: Jordan and Saudi Arabia.

For most of the time Israel has existed, Saudi, as one of the leading Muslim nations and home to the holy city of Mecca, has been its implacable foe. But now it is on the verge not just of tolerating Israel but becoming an ally.

Similarly, back in 1967, Jordan actually invaded Israel – a disastrous move which lost it the territories of East Jerusalem and the West Bank. Yet now Jordan, too, has stood alongside Israel to protect it from Iranian bombs. This newfound cooperative spirit continues apace: it has emerged that both the Saudis and the United Arab Emirates had passed helpful intelligence to America to use in Israel’s defence, with Jordan further agreeing to let the US and “other countries’ warplanes” use its airspace, as well as sending up its own jets. The rise of Iran – and its chilling proximity to a nuclear weapon – has driven old foes closer.

Iran now dominates a vast region from its borders with Iraq, through Syria and Lebanon, to the Mediterranean. Through its Yemeni proxies, the Houthis, and its own navy, it is causing chaos and major disruption in the key Red Sea trade route.

And it has turned the Palestinian cause into a strategic vehicle for its own ambitions through two other proxies, Hamas (Gaza) and Hezbollah (Lebanon). This chaotic and meddlesome statecraft has appalled other Muslim countries.

The story of the Middle East used to be “Israel versus everyone else”. However, that is no longer true. To understand how all this has come about, you need to go back to the very roots of Islam – and the schism within it. In 610AD, Mohammed unveiled a new faith. By the time he died in 632AD, he and Islam were all-powerful in Arabia, and within a century it had subjugated an empire stretching from Central Asia to Spain.

But as history teaches us, Islam was split over who should succeed the Prophet. One faction argued the leadership should be passed through his bloodline. They became known as Shias, from shi’atu Ali, Arabic for “partisans of Ali”, who was Mohammed’s cousin and son-in-law.

The others, the Sunnis (followers of the sunna, or “way” in Arabic) said leadership should be determined on merit.

Ali was elected as “caliph” (spiritual leader) in 656AD but within five years was assassinated, enshrining an enduring split.

Fast forward to 2024, and about 85 per cent of the world’s 1.6billion Muslims are Sunni, while 15 per cent are Shia.

Two countries now vie for the leadership of Islam, Sunni Saudi Arabia and Shia Iran. Since the mullahs seized power in Tehran 45 years ago, the divisions and mutual hatreds have only grown.

As a minority within Islam, the Shiites have historically been treated as subordinate in Sunni-dominated countries. But there has been a significant growth of the Shiite population in Gulf nations. This has increased anxiety among Sunni rulers over the growing power of Shia Iran.

In Gulf states such as the UAE, Kuwait, Bahrain, and especially Saudi Arabia, the Shia threat – in other words the threat from Iran – is seen as existential.

Egypt, too, which has had a peace treaty with Israel since 1979, is also an arch enemy of the mullahs. In Israel’s 2006 Lebanon war with Hezbollah, Sunni countries were, behind the scenes, willing Israel to triumph, just as it is said now that Jordan, Egypt, and Saudi Arabia want Israel to destroy Hamas in Gaza.

The rapprochement of some Sunni countries was embodied in the 2020 Abraham Accords which normalised relations between the UAE, Bahrain, and Israel, and later Morocco and Sudan.

There is logic, then, to the deepening alliances between Sunni states and Israel. The Arab nations understand that while Israel has no ambitions to dominate its neighbours, Iran seeks to control all of the Middle East.

What’s indisputable is that if you don’t understand this split and history, you can’t understand the Middle East at all.

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