Saudi Arabia Did This To Itself | Abqaiq Attack | Yemen 19

I dislike reacting to events quickly, the way that this video does. But this channel obviously couldn’t let the attack on the Abqaiq refinery go uncommented on. Saudi Arabia is sort of my bread and butter, and this could very well be the biggest thing that has happened to Saudi Arabia since it’s idiotic decision to invade Yemen back in 2015. Two weeks later, I’m pretty pleased with my coverage. In the video I referred to my surprise that the oil price spike had been so small. My surprise has only grown.

As of today, the price of Brent Crude oil fell back below the 60 dollars a barrel mark. Two weeks after an attack disrupting half of Saudi Arabia’s production, oil prices are back where they were before the attack, but the oil market has changed irrevocably. In the comments, and unfortunately in the video itself, there is a lot of emphasis on how quickly or slowly Saudi production resumes. That’s important, but it’s not that important. Two weeks later, it’s still not entirely clear what the on the ground impact is. The important thing is that the market no longer seems to really care that much. Reading articles on outlets like has gotten seriously depressing. It’s become clear that high prices, not really seen since 2014, are not returning any time soon. I said it in the video, and I’ll say it again now, with two weeks of reinforcement: This is HUGE. Ten years ago, even if Saudi Arabia restored full production the within hours, prices would have spiked, and wouldn’t have come down for months. The attack itself would have sent a message of risk and worry that would jack up prices for weeks.

Now that the worst has happened, and prices haven’t gone up at all, a different message is being sent, loud and clear: Saudi Arabia just doesn’t matter that much anymore.

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Video Transcript after the jump…

Hey there. For two and a half years now I’ve been sounding the alarm about Saudi Arabia’s inevitable decline, and how I think the royal family should be gone by 2030. It seems like every fall brings a new milestone in that process. In November 2017, the government that was supposedly looking for outside investment kidnapped and extorted the country’s largest investors. In October 2018, Saudi Arabia’s government sent a kill team to dismember Jamal Khashoggi, a Washington Post reporter who was personal friends with the foreign policy elites of the United States, Saudi Arabia’s greatest protector and patron..

Those were both incredibly stupid and damaging things for Saudi Arabia to do to itself, but the attack on Saudi oil installations this past weekend is on a whole nother level.

What looks like a combined drone and missile attack at two Saudi facilities has temporarily knocked out 50% of Saudi Arabia’s oil production capacity. This amounts to five to 6 percent of world production. Saudi Arabia finally has the oil price spike they have been working so hard for since November 2016… and it’s the Texans and the Russians who will get the benefits.

The US government is currently desperately trying to pin these attacks on Iran, but no matter what they come up with, it does not change a simple fact. This attack is Saudi Arabia’s fault more than anybody else’s.

It’s worth re-emphasizing a point that often gets lost. This attack on Saudi Arabia’s oil resources isn’t an escalation or a provocation. Saudi Arabia invaded its neighbor Yemen four years ago. It has killed tens of thousands of people directly, and its blockade has likely led to more than a hundred thousand deaths from cholera and starvation. Saudi Arabia’s allies, from the US Congress to the United Arab Emirates have been making it damn clear that it’s time to give up on this war before it gets worse. Well it just got worse.

Yemen’s Houthis have claimed responsibility for this bombing and I am inclined to accept that. Yeah it’s a shame that Saudi Arabia lost half its oil capacity temporarily, but they have been murdering children for four years. This attack is not an escalation, or terrorism. This is a war and it is a war that Saudi Arabia started.

Surprisingly, the Trump administration has been crying wolf about Iran for so long, that not even the reliably pro war New York Times is buying their bullshit. Thanks largely to Khashoggi, nobody is interested in seeing Saudi Arabia as the victim anymore. US intelligence is now unequivocally claiming that the attack came from Iran, but Saudi Arabia wants the UN to do an investigation to slow down the March to war.

It seems that Saudi Arabia has been effectively deterred by this attack. Trump is locked and loaded, but the Saudis have learned an overdue lesson. As I warned a couple months back, a real war in the Gulf would end the Saudi royal family long before it ended the Iranian regime.

Saudi confidence in the promises of billion dollar weapons from the US was always misplaced. Iran’s weapons make up for their lack of sophistication with their quantity, making Saudi Arabia’s production infrastructure very vulnerable. I did not expect this point to be proven before the war even started.

It’s unclear how long it will take for Saudi Arabia to come back online, but even if they fix the physical damage quickly, this incident has undermined their position in an vital way. This attack has had a shocking effect on markets. But the effect is shocking because it has been so small.

One of the big talking points about this attack is the fact that it is by volume, the largest disruption of oil markets ever. But what this handy graphic from Bloomberg leaves out is that production from the US, and around the world is now so much larger. This attack is demonstrating just how little Saudi Arabia matters anymore.

The attack took place on Saturday. On Monday oil prices did spike by 15% but they fell back on Tuesday. As of this writing, the loss of half of Saudi Arabia’s oil production has led to only a 5% spike in oil prices, and around a 1% drop in the US stock market. That’s extraordinary. Famed TV stock picker Jim Cramer commented on this. Now don’t get me wrong, this could turn on a dime. Oil could be up 25% by the time this video is published later today.

You may have been hearing the term “risk premium” a lot this week. Hopeful oil traders are imagining that this attack will give prices a permanent boost. But it may do the opposite. This attack may have shown just how little Saudi Arabia matters now, and how secure our oil supplies really are. That makes Saudi Arabia essentially useless.

Thanks for watching, please subscribe, and you might enjoy this video on the Aramco IPO that helps to illustrate how much trouble Saudi Arabia is in.