From UPSC perspective, the following things are important :
Prelims level : Nothing Much
Mains level : Houthi attack on Saudi - Peace in the Middle East
The drone attacks on major Saudi hydrocarbon facilities have led to a spike in world oil prices.
Facts of the issue
- The attacks are claimed by Yemen’s Houthi rebels.
- It has knocked out more than half of Saudi crude output and5% of the global oil supplies.
- Oil industry experts say the damage is serious and Saudi Arabia will not be able to quickly make up for the shortfall in production close to 5.7 million barrels a day.
Marginal global impact
- Global oil production expanded in recent years and there is the emergence of new major exporters like the US.
- The world could possibly absorb the new oil shock without too much pain.
- Drone attacks have exposed the massive vulnerability of Saudi oil production
- Houthis have promised to attack again if Saudi Arabia continues its four-year-old war against them
- The other is the danger of escalation in the tension between Saudi Arabia and Iran that has enveloped the region in proxy wars.
- If Saudi Arabia has supported the government in Yemen in the tragic civil war, Iran has been the main backer of the Houthi rebels.
- Iran has backed the Houthi right to self-defense against Saudi Arabia.
- The US decision to blame Iran after the attack appeared to push the region to the brink of a new war.
- In the last couple of years, Iran has seen most of its oil exports vanish due to the American sanctions.
- Though Iran can hurt Saudi oil production, a military confrontation with the US could set Tehran back by decades.
- The recent developments offer an opportunity for all sides to step back.
- The US and Saudi Arabia have miscalculated that Iran would cave under the current campaign to put “maximum pressure”.
- The current lose-lose situation should open the door for sensible compromises all around.
- India, which is friends with all the actors in the Middle East, can easily do more than being a passive observer.
- Like Japan and Europe, which are trying to calm the waters, India too must step in to nudge the region towards military restraint and political engagement.