Interesting take on the current events and makes sense re. the vunerability of the supply infrastructure. With all the recommendations from foreign legations for their citizens to leave this would have the same effect on output as destroying the distribution network.
Saudi Militants Hitting Westerners, Not Oil posted on 05/30/04
The terrorist strike in al-Khobar appears to be more ominous than recent similar strikes in Saudi Arabia. It resembles the May 1 attack on western oil workers in Yanbu, but was more elaborate and more deadly.
The attackers were organized and they seem to have prepared extensively for the assault. They wore uniforms of the Saudi National Guard, which is responsible for security at residential compounds of foreign workers, and they drove vehicles with military markings. They successfully struck multiple targets and managed to fight off security forces for a considerable period of time. They took hostages, rigged their location with explosives, and all but one gunman reportedly escaped a siege by Saudi commandos on the sixth floor of a high-rise building.
Based on a statement attributed to its planners, the primary aim was to lash out at westerners who work in the Saudi oil industry and drive them out of the Arabian Peninsula. This motivation is corroborated by the attackers' behavior. For example, this is the second recent incident in which a foreign worker's body was reportedly tied to a vehicle and dragged through the streets by militants, a tactic clearly meant to terrorize and strike fear into the hearts of foreigners living in the kingdom.
According to eyewitnesses, the attackers meticulously avoided harming Arabs and Muslims as they mistakenly had in previous attacks. This time, they questioned the residents they encountered who were not obviously westerners in order to ascertain their identity. This time, Arab nationals and even an American Muslim were spared by the discriminating attackers.
In assessing the impact on the oil market, these terrible attacks must be put into perspective. While they have succeeded in murdering westerners and terrorizing the expatriate community in Saudi Arabia, they have not (and likely will not) result in any disruption of Saudi oil exports, except for indirect delays and expenditures related to improving security for foreign workers and companies. Some oil traders may consider this before making panicked buying decisions when trading resumes following the long holiday weekend.
If attacks against westerners in their places of work and residence in Saudi Arabia are not enough to create a global oil crisis, what would be?
We would have a crisis if terrorists hit the Saudi oil infrastructure as hard as they hit the World Trade Center – with the force to destroy it.
If terrorists really wanted to strike a severe blow at the Saudi oil industry and the ruling family, they would have to disable the kingdom's ability to produce and/or export oil. A scheme like this could involve crippling attacks on the kingdom's vital oil infrastructure, such as the Abqaiq processing facility or the export terminals along the Arabian Gulf. But even if a scenario like that were to develop, at least those problems can be fixed. Pipelines and terminals can be repaired.
The very worst-case scenario for the United States would be a political crisis – a coup d’etat in Saudi Arabia in which the royal family is overthrown by anti-western militants, who would rather plunge their country into economic chaos than export oil to the West.
So far, this does not appear to be the motivation of the militants.
If recent statements by the masterminds of the Yanbu and al-Khobar attacks are authentic, the militants are concerned with protecting Saudi oil wealth from foreign infidels. If this is true, it makes sense that they would target westerners working in the Saudi oil industry, but not Saudi oil itself. If this is the motivation, the last thing the militants would do is take out Saudi Arabia’s oil fields or export terminals.
As long as the terrorists limit their attacks to residences and offices of westerners in the kingdom, we will have a terrible human tragedy with limited economic impact.
On the other hand, if the militants eventually declare war on their own rulers and become willing and able to sacrifice their country’s economy to achieve their goals, we could also have a global oil shortage and geo-political crisis with profound economic consequences for the United States.
