Thread by @varshakoduvayur

Thread on the attack at Abqaiq in #Saudi:
1) The attack fits the pattern of Iran signaling to the Gulf states that if it can't get its oil out, it will cause their oil exports to become collateral damage. Iran aims to force KSA to dial back support for the max pressure campaign

2) The timing and targeting of these latest attacks can't be divorced from the ongoing preparations for an Aramco IPO. Iran is trying to derail the IPO with these attacks. Its intent is to give interested investors pause, as they begin to price in Aramco's geopolitical risks

3) Anything the Iranians can do to deter the IPO would be a huge win for them on many levels. Given that the IPO is MBS' flagship idea, any damage they do here would directly threaten his legacy. At minimum, their actions will make it harder for MBS to get the valuation he wants

4) The attack will cause a short term price spike. Brent is already trading at its highest levels since May. That said, this attack alone might not contribute to a long term price hike. Aramco is a state of the art company and they have redundancy built into their operations.

5) It may take weeks rather than days to get some of the damaged infrastructure back online, but Aramco has the capability to plug the gaps in the short term.

6) The attacks are unlikely to cause a shift in OPEC's policy, at least through the year end. The market still remains oversupplied relative to demand. Trade war tensions between the US and China haven't cooled yet, and US shale output remains at a healthy level

7) The Saudis have been very insistent that they do not need Russian or other non-OPEC member to up production. They are worried about an OPEC member using this supply shortfall as a reason to pump more (e.g. Iraq and Nigeria.) The Saudis are keen to preserve their market share

8) The biggest risk is that these attacks keep escalating in scope. What started as attacks on tankers in the Strait then morphed into attacks on a pipeline in Saudi, now to attacks on the largest oil facility in Saudi. The Iranians are playing a game of chicken with the US & KSA

9) The attacks also show how the Iranian threat to the Arabian peninsula has morphed over the past three years. There have been differences in opinion over the extent to which the Iranians have built up the Houthis as a proxy.

10) But the Houthis claiming responsibility for this shows that they are becoming more willing to take direction from Iran. It's no longer that the Houthis are opportunistic and working with whatever partner they can find to damage Saudi. They're becoming a Hezbollah of the Gulf

11) US now says attacks came from Iran, not Iraq. But Iraq still remains a viable staging ground for Iran for future attacks on the Gulf, a huge risk for US-Iraq relations. The threat of Iranian encirclement of the Gulf is metastasizing.