oil politics saudi arabia yemen

Saudi Arabia Agrees To Yemen Ceasefire In Major Geopolitical Deescalation: Reports

The news comes just two weeks after the attacks on the kingdom's oil infrastructure.

Two weeks on from the worst attack on the kingdom’s oil infrastructure in decades, Saudi Arabia has reportedly moved to impose a partial ceasefire in Yemen.

The decision, first reported by the Wall Street Journal, comes a week after the Houthis announced a surprise halt on drone and missile strikes.

“We declare ceasing to target the Saudi Arabian territory with military drones, ballistic missiles and all other forms of weapons, and we wait for a reciprocal move from them”, Mahdi al-Mashat, head of the Houthi supreme political council said last Friday, adding that the group “reserves the right to respond if [Saudi Arabia] fails to reciprocate positively”.

(Center for Strategic and International Studies)

Fast forward seven days from Mashat’s declaration and Riyadh is apparently prepared to take his advice and “reciprocate positively”.

The Journal cites “people familiar with the plans” in reporting what the Saudis are apparently going to call a “partial” cessation of hostilities.

Aramco has spent the two weeks since the attack rushing to restore output and convince the world that the September 14 strikes shouldn’t be a reason to doubt Prince Mohammed’s plans to take the company public. Reports this week painted markedly different pictures of the situation, with production capacity either rebounding rapidly or proceeding slower than expected, depending on which major news outlet you care to consult and the IPO either nixed for 2019 or on track for November, depending on the day.

Crude tumbled on Friday’s reports that Riyadh is set to acquiesce to the ceasefire.

The conflict has become a point of contention between the Trump administration and Congress, which passed a bipartisan resolution this year aimed at ending US support for the conflict, which has spawned one of the worst humanitarian crises on the planet.

The White House has resisted. In April, Trump used the second veto of his presidency to block the resolution, calling it “an unnecessary, dangerous attempt to weaken my constitutional authorities”. The Senate failed to overturn the veto.

Trump’s Yemen policy is the product of the administration’s unwavering support for Prince Mohammed, who briefly became an international pariah following the extrajudicial killing of dissident journalist Jamal Khashoggi. Congress’s efforts to block US military support for the Crown Prince’s efforts in Yemen were in part a last ditch effort to hold the monarchy accountable for the murder.

In his speech at the UN General Assembly this week, Iran’s Hassan Rouhani said Tehran would guarantee Saudi Arabia’s security once hostilities in Yemen ceased. This would appear to be a step in that direction and comes less than 24 hours after the Pentagon provided details about the deployment of additional US military assistance to the kingdom.

“I call on all parties from different sides of the war to engage seriously in genuine negotiations that can lead to a comprehensive national reconciliation that does not exclude anyone”, Houthi leader Mashat said last week. The goal of the group’s efforts to deescalate is to “preserve the blood of Yemenis and achieve a general amnesty”, he added.


 

9 comments on “Saudi Arabia Agrees To Yemen Ceasefire In Major Geopolitical Deescalation: Reports

  1. babeinwoods says:

    Finally some positive news. I bet Trump is disappointed.

  2. Lance Manly says:

    The IPO is huge to MBS, it will go nowhere in continued hostilities. Maybe Iran will get tired of all the winning.

  3. Jepps says:

    Leaving partisan politics out of the equation, this is a really smart strategic move on several levels. Iran is still having their economy undermined. The US threat to China regarding the delisting of Chinese equities and bonds may partly be to push them to observe the Iranian oil embargo as well as provide leverage for the US in a trade deal. Saudi Arabia gets to move forward with their IPO. The Houthi rebels get a respite from the Saudis. The US avoids a shooting war. The only loser in the above scenario is the Iranians who have been unsuccessful in trying to push the US to remove sanctions.

    • Not really. The Saudis have spent billions in a manifestly unsuccessful war that has damaged their international reputation irreparably and they’ve been totally unable to restore Hadi’s government, which was the whole point. In other words, it’s been four years and the Saudis haven’t accomplished the one thing they set out to do in Yemen. In fact, things had gotten materially worse lately, as the UAE-back separatists splintered off and started fighting the Saudi-backed forces, an absurd outcome that turned the whole thing into a civil war within a civil war and forced the UAE and the Saudis to essentially beg everyone to stop fighting each other and get back to fighting the Houthis. Meanwhile, the Saudis had 50% of their oil supply capacity knocked out, denting the reputation of Aramco at the worst possible time.

      Your “scenario” seems to suggest you don’t understand the Yemen conflict. At all.

      • Read this, from BBG:

        “Despite the overwhelming military superiority of the Gulf allies, the war has turned into a quagmire that has crept ever closer to home.

        Recognizing the growing danger of a regional escalation, the U.A.E. has signaled that it intends to scale back its presence, with the last soldier leaving by year-end.

        The Saudi cease-fire comes on the heels of a visit to the country earlier this month by U.S. Assistant Secretary of State for Near Eastern Affairs David Schenker, who said Washington was talking with the Houthis. The Wall Street Journal was the first to report that the Trump administration was also trying to cajole Saudi Arabia into negotiations with rebel leaders, at a time when concerns over a possible broader conflict with Iran were growing.”

        Does that sound like “winning” to you?

        • Jepps says:

          You’re take is correct about the Saudis losing the war in Yemen. It was already lost when the UAE decided to disengage – and even before then. The war was a sunk cost and a bad miscalculation.

          But ….. the Saudis get an off ramp, get their IPO, and get the US to commit to further protect them with and escalation of troops and weapons systems on the ground. I don’t know enough to comment about their international reputation, but money, power and time have a way of allowing rehabilitation of that issue.

          Iran still has no legal markets to sell their oil, remains under sanctions, and now has no legitimate excuse for attacking Saudi Arabia further – not that they necessarily need one. While their regional prestige may be improved, their economy is still being pressured.

          One last thing – I enjoy reading your articles and am happy to pay for your insights. I was respectful with my comment and tried to be apolitical. There was really no need to say that I do not know anything at all about the issues. I certainly don’t know as much as you do, but that probably applies to many others when it comes to finance and international events.

          • Oh, come on. If you’re a long-time reader you’re fully aware that I can be abrasive. It’s not “insulting readers”, it’s me responding honestly. I’m hardly the world’s foremost authority on Yemen. But I do know a thing or three about the conflict. I take these discussions seriously. I write these articles to be informative, not to generate clicks. So yes, I read the comments. And yes, I sometimes snap at folks. I used to know a guy who ran a site that did millions upon millions of page views per month and one of his standing rules was to never, under any circumstances, engage with commenters. The rationale was simple: somebody might get offended and stop paying/clicking. I thought that was a horrible policy because by definition it meant that he thought of readers not as people, but as clicks. I appreciate every, single person who spends even 2 minutes on Heisenberg Report. If I didn’t value your opinion, I wouldn’t have read it in the first place let alone taken the time to respond.

  4. jyl says:

    Saudis are losing their Yemen war to the Houtis and their supporter Iran. Iran has struck 2x against the US and Saudi and the US and now Saudi have failed to respond. I’d say Iran is winning so far. If US and China relations deteriorate further, expect China to buy so much oil from Iran that US sanctions will be largely circumvented. China should pay in CNY, the Iranians won’t have a choice and it will start eroding USD dominance in oil.

  5. Vicissitude says:

    My concern in this Iran/Saudi turmoil is the same concern I have with too many corporations from China being intermingled into US equity and debt markets and thus pension funds which connect themselves to political risks. Yes, it’s a global market with cross-border complexities and computerized AI efforts to hedge risk, but when risk hedging becomes a matter of national security, such as trump deploying troops to protect a commodity, the pension risk element is connected into a new level of political instability. When the USA has to spend billions (or trillions) to protect trillion dollar IPO’s that opens up Pandora’s Box, because then, there’s a game as to who pays for protection and sorta looks like a game of gangsters. In this case, we might end up with the trump mafia extorting money as both a private and sovereign matter — and meanwhile the sheep plowing money into pensions are held hostage by an entirely new game that warps commerce. I guess I’m naive to think that this isn’t already common place, but our new monarch seems more than willing to use extortion and political power to create whatever monopoly he thinks will help his gang. It just seems as-if pensions are being pushed into a new level of stupidity!

    Sept 26 (Reuters) – The Pentagon said on Thursday it plans to send four radar systems, a battery of Patriot missiles and about 200 support personnel to bolster Saudi Arabia’s defenses after the largest-ever attack on the kingdom’s oil facilities this month

    Politico: Even Sen. Lindsey Graham, a South Carolina Republican aligned with Trump, has called the crown prince a “wrecking ball.” Given that Crown Prince Mohammed is in his 30s, he could rule for decades.

    Saudi Arabia has spent billions of dollars on U.S. weaponry over the years, raising questions about why it would need U.S. support were it to retaliate against Iran.

    “Direct engagement by U.S. military in response to Iran’s attacks on Saudi oil infrastructure would be a grave mistake,” Sen. Mitt Romney (R-Utah) tweeted Monday. “The U.S. has continued arms sales so Saudi Arabia can defend itself. If S.A. responds against Iran attacks, the U.S. should be ready to support in a non-kinetic role.”

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