Saudi Arabia set back by Yemen ceasefire and collapse of oil prices

A protest against British arms sales to countries such as Saudi Arabia, in London in 2017. Photo: Alisdare Hickson / CC BY-SA 2.0

Saudi Arabia’s ruling monarchy announced a two-week unilateral ceasefire in their war on Yemen in early April. While this is a welcome development providing a measure of relief for Yemen’s people, it comes as the Saudi offensive in that nation teeters on the brink of military defeat after five years.

Sadly, all Middle Eastern nations, including Yemen, have recorded outbreaks of COVID-19. The Saudi royal clan has witnessed at least 150 of its members infected with the Coronavirus. While the pandemic is serious, it is only one of a number of reasons why Riyadh decided to change its long-held course in Yemen. The latest unilateral ceasefire is not only a major climb down from the stated goal of outright military victory in Yemen — it also represents the declining ability of the Saudi regime to influence political events in the region.

The Daily Beast’s world news editor wrote about the ongoing war on Yemen, and how Crown Prince Mohammed Bin Salman’s (MBS) gamble in that nation has spectacularly backfired. "When MBS entered that conflict in 2015 he thought he could win in a matter of weeks with his vast arsenal of American weaponry, but the war has since become a suppurating wound on Saudi Arabia’s southern border. His Houthi adversaries there have taken to launching Iranian-built missiles at targets as far away as Riyadh, and hit the enormous Saudi oil facilities at Abqaiq last September with devastating effect."

There is no mistaking the enormous calamity that this US- and British-supported Saudi war has inflicted on the Yemeni population. From the same Daily Beast article: "Since 2018 the United Nations has identified Yemen as the scene of Earth’s greatest humanitarian crisis, with some 80 percent of the population in need of assistance, hundreds of thousands of malnourished children, and a rampant cholera epidemic that has infected more than 1 million people. Such conditions make effective monitoring of the COVID-19 pandemic extremely difficult or impossible."

OPEC, Russia and Saudi Arabia

It is impossible to discuss Saudi Arabia, and its war on Yemen, without discussing the crucial role of the oil industry and OPEC Saudi Arabia has seen its oil revenues tumble dramatically in the first quarter of 2020. The drop in demand for oil, the huge reductions in airline flights, cargo shipping and individual car commuting, have left a gaping hole in the petroleum industry.

OPEC, the Organisation of Petroleum Exporting Countries, was formed in Baghdad in 1960. Headquartered in Vienna since 1965, OPEC has expanded from its original five member-states (Saudi Arabia, Iran, Iraq, Kuwait and Venezuela) to incorporating numerous oil-exporting nations. Its role is to coordinate the petroleum prices and policies of the member states. Prior to its formation, each oil-exporting nation would compete against the others, bidding in an oil competition for the best price on the open market.

Operating as a cartel, the OPEC nations have bargained collectively, rather than individually, with the major Anglo-American multinational oil corporations. This collective approach has provided OPEC member-states with a degree of bargaining power, something they lacked previously. Setting the world price of oil per barrel, the role of OPEC is, in many ways, to even-up the otherwise lopsided playing-field. The oil and energy giants have long exploited oil-rich nations, to maximise their profits.

OPEC has had negative press in the Anglo-American sphere of the world. The OPEC cartel represents an expression of resource nationalism — the exertion of national sovereignty over natural resources. Iran’s oil resources belong to the people of that nation. The wealth generated by that income should go towards improving the lives of the Iranian people. Anglo-American imperialism has intervened in Iran to monopolise its oil resources for the enrichment of their own multinational corporations.

While not anti-capitalist, asserting resource nationalism is strongly opposed by the major imperialist powers. Saudi Arabia acts as a stalking horse for the United States inside OPEC — a Wahhabist theocracy sustaining its alliance with a theoretically-secular capitalist power.

The second-largest exporter of oil in the world, a nation with enough economic weight to exert pressure on the global economy is a non-OPEC nation: Russia. While Russia has been invited to join, the Kremlin has consistently refused.

Russia and Saudi Arabia have had a mini-Cold War, dueling with competing oil prices, for decades. Occasionally, that rivalry has erupted into an openly ‘hot’ war, such as earlier this year. While both sides were cooperating under a new charter of cooperation since 2016–17, relations fractured in March this year when Riyadh decided to cut oil production in response to slowing demand for oil. Moscow disagreed with this move, and Riyadh responded with an oil price war.

Moscow was in a stronger position to weather the oil price rivalry — its economy was stronger, and the Kremlin had larger foreign currency reserves. However, Moscow was also hurting, as oil prices declined and the revenue stream slowed down. The recent decision, arrived at by Russia and Saudi Arabia, to agree on a 9.7 million barrels per day (bpd) reduction in oil output temporarily halted the industry’s slide into total collapse. However, the humanitarian and societal collapse in Yemen is ongoing, albeit partially relieved by the ceasefire.

The dramatic reduction in oil revenues, its deepening military defeat in Yemen, and the added problem of the COVID-19 pandemic have all placed Riyadh on the back foot. As Imad Harb explains on Al Jazeera, the coronavirus outbreak is the ostensible reason why Saudi Arabia is seeking an exit from the Yemen quagmire. The Saudi-led coalition in Yemen, dubbed Operation Decisive Storm, has all but disintegrated. The Emiratis withdrew their troops in July last year.

The humanitarian catastrophe engulfing Yemen today would not have been possible if not for the unwavering support provided to the Saudi offensive by the United States and Britain (and also Australia). Intelligence sharing, refuelling of Saudi warplanes, military coordination of drone strikes — all these features implicate the deep complicity of the Anglo-American alliance in Saudi Arabia’s war on Yemen.

It is time to hold to account those politicians whose decisions have resulted in disastrous and criminal consequences.

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