The New ‘Mecca Alliance’ Warns Iran Over Houthi Attacks on Saudi Arabia

Despite the official Iranian view reiterated last week that it “does not control the Houthis [in Yemen]”, it was senior Islamic Revolutionary Guard Corps (IRGC) commanders in Tehran who ordered the 8 September attacks on Saudi Arabia, while several IRGC officers and men on the ground in Yemen co-ordinated the strikes, a senior source in the European Union’s (EU) energy security complex exclusively told OilPrice.com. “The IRGC’s been funding, arming, and training the Houthis for years, and frequently advises it in live, high-profile missile strikes on the ground, as happened here,” he added. “It went well from their [Iran’s and the Houthis’] perspective, so there will be more, unless this new defence alliance succeeds in stopping it,” he added.This Makkah Defence Alliance was officially formed on 7 August this year, comprising Saudi Arabia, Turkey, and Pakistan, and explicitly modelled around the core collective defence principle enshrined in NATO’s Article 5 -- that is, that an armed attack on one member shall be considered an attack against them all. Broadly speaking, Saudi Arabia brings deep financing ability and a vast network of regional intelligence contacts to the grouping. Turkey -- itself a member of NATO and tied into the U.S. and its key Western allies -- has advanced military hardware, high-tech defence equipment, and a well-established production line for artillery and drones to the alliance. And Pakistan provides a huge frontline military and nuclear weapons. Pakistan’s Defence Minister Khawaja Asif stated that its ‘full military capabilities’ would be available under their defence agreements. Subsequently, it was clarified that the Alliance pact is strictly defensive and conventional -- but it does still have the weapons. The timing of the Alliance’s formation was no accident, coming as it did after the perceived failure by its key allies in the Middle East of the U.S. to provide them with the sort of invulnerability from attack by Iran that they believed they were buying with billions of dollars’ worth of American defence equipment. These have included major repeated Iranian missile and drone attacks on Jordan, the UAE, Kuwait, Qatar, Bahrain, and Oman, including military, commercial, and energy sites. U.S. arms purchases by Saudi Arabia dramatically ramped up after the September 2019 attacks by the Houthis on several of its key oil installations, including its massive Abqaiq oil processing facility and Khurais oil field, as analysed in full in my latest book on the new global oil market order. The combined attacks caused the temporary suspension of 5.7 million barrels per day (bpd), equating to well over half of Saudi Arabia’s crude oil production capacity, and resulted in the biggest rise in oil prices in a single day ever to that point. The fact that even before the latest attacks on it on 8 September this year, Saudi Arabia had been hit several times by the Iran-backed Houthis, had catalysed Riyadh’s belief that it could no longer fully rely on the U.S. for its security and had to build a regional deterrent as well, formed of fellow Sunni Islamic countries.Given how successful the 8 September attacks against Saudi Arabia were from the Iranian and the Houthi perspective, it is highly likely that more have been planned, according to the EU security source. “Iran knows that [U.S. President Donald] Trump doesn’t want to see oil prices rise too much more ahead of the [3 November] Mid-Terms [elections], so hitting major oil targets like Saudi reminds him [Trump] of the leverage it [Iran] still has here,” he said. In fact, as also examined fully in in my latest book, historical data shows that every US$10 per barrel or so change in the price of crude oil results in around a 25-30 cent change in the price of a gallon of gasoline. And for every 1 cent that the average price per gallon of gasoline rises, more than US$1 billion or so per year in consumer spending is lost, so damaging the economy. The political importance of this is that since 1896, the sitting U.S. president and his party have won re-election 11 times out of 11 if the economy was not in recession within two years of an upcoming election. However, sitting U.S. presidents who went into a re-election campaign with the economy in recession won only once out of seven occasions. The same pattern pertains to mid-term elections too.“The recent attacks on Saudi Arabia also remind Washington, and the oil markets, that Iran also has further leverage with the Houthis, who could fully close the Bab el-Mandeb Strait to all global shipping, having so far confined their blockade to Saudi vessels only,” he added. With severe disruption still ongoing to the Strait of Hormuz -- through which roughly 30% of the world's oil and about 20% of its liquefied natural gas (LNG) historically flowed -- any additional pressure on the Bab el-Mandeb Strait (through which up to 12% of the world’s oil and up to 10% of its LNG moved) could cause another dramatic spike in oil prices and perhaps catalyse a major military error from Trump. “It does appear for now that Trump is playing the long game of waiting for the Iranian regime to crumble as the new sanctions on the country and its supporters destroy the economy, but Iran has been dealing with these sorts of things for nearly fifty years, and in the meantime they can cause Trump a lot of damage, and still claim it’s winning,” he added.This may be where the new Makkah Defence Alliance proves its worth and, if not, its redundancy. Already, a senior source who works closely with Iraq’s oil ministry exclusively told OilPrice.com last week, Pakistan conveyed a warning to Tehran from Riyadh that the IRGC must stop the Houthis from making any further such attacks on Saudi Arabia. This followed Pakistan’s Defence Minister Khawaja Asif stating on Pakistani TV that attacks spilling into Saudi Arabia could trigger the new joint security arrangement involving Riyadh, Ankara and Islamabad. He reiterated the core guiding principle of the Alliance, saying: “An aggression on one country will be considered an aggression on all three countries.” He added: “There is no ambiguity or doubt... Unprovoked aggression or spillover... into Saudi Arabia will definitely make this agreement operational.” As of now, according to the EU and Iraqi sources, no definitive plan of retaliation has been made by the Alliance following the Houthi attacks on the Kingdom’s southern cities of Abha, Khamis Mushait, Jazan and Najran that reportedly wounded 73 people, including women and children. That said, they add, senior military figures from Pakistan and Turkey met with their Saudi counterparts after 8 September to work on a broad-based plan of action should it become necessary, which would be launched exclusively from Saudi Arabian territory and would not involve Pakistani military on the ground in the Kingdom in the first instance.For their part, the Houthis had earlier warned of a broad operation to be launched deep in Saudi territory, and they did indeed follow through. A lightning advance in recent days across the southern reaches of Yemen’s Tihamah coastal plain saw the Iran-backed group capture as much as 130 kilometres of the country’s Red Sea coast territory previously held by the anti-Houthi coalition known as the National Resistance. This now definitively places decisive control over both the Strait of Hormuz and the Bab el-Mandeb Strait in Iran’s hands, and multiple military and government sources have officially confirmed that the Houthis have successfully seized control of Perim Island (also known as Mayun Island), alongside several other key islands in the Red Sea. This gives the Houthis and Iran far greater leverage over the Red Sea/Suez Canal transit route than they had before, and shipping firms remain sceptical about earlier Houthi statements saying that maritime navigation in the region was “safe for all companies except for Saudi vessels, which have already been subject to a blockade”. In the meantime, following the Houthis’ earlier missile and drone attacks on Saudi Arabia, oil traders expect the Kingdom to run out of oil stocks for exports if it does not restart its East-West Pipeline that runs into the Red Sea port of Yanbu within days, affecting up to 4% of global oil supply. As it stands, nothing new has been heard from the Makkah Defence Alliance on the subject.By Simon Watkins for Oilprice.comMore Top Reads From Oilprice.com$100 Oil Puts Central Banks Back on Inflation AlertDrone Strikes Cripple Half of Russia's Top Diesel RefineriesChina’s Yuan Crude Oil Futures Jump to Record High