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10:00:00:04 – 10:00:15:11
Daniel Winter
Saudi Arabia has become the pivot point of the global economy. It has some of the biggest crude reserves in the world, but now it’s struggling to get that oil out. War has choked its main shipping route. Its backup, a pipeline in the Red Sea, was hit by drones this month.
10:00:15:13 – 10:00:30:09
Daniel Winter
America, its protector, an ally for decades, declined to step in. So Riyadh seemingly turned to China for help. Meanwhile, European buyers are told that they won’t be getting any Saudi oil at all. Compounding worries of an energy crunch.
10:00:30:11 – 10:00:44:03
Daniel Winter
So who does Saudi Arabia trust to protect it now? And if Saudi can’t keep itself safe. Who pays the price? Welcome to The Dip, your podcast for Money, Power and Consequences. I’m Daniel.
10:00:44:05 – 10:01:10:05
Daniel Winter
So to get more on this topic, I have my team of experts here. We are joined by Kate Dourian, who is a fellow at the Washington, DC based Arab Gulf States Institute and who’s covered Gulf oil for for decades and is tracking where Saudi Arabia’s crude can still get out. And Andrew Leber, who’s a political scientist at Tulane University in the US and has spent years researching inside Saudi Arabia how its rulers make decisions and what they expect from Washington and Beijing.
10:01:10:10 – 10:01:33:17
Daniel Winter
Kate and Andrew, welcome to the debate. And, Kate, I’d like to start with you for the first question. And you started out as a correspondent in Beirut. You’ve been all over the region, and you’ve been tracking, oil and energy there since the 90s. Saudi Arabia is normally, a fairly stable country. So when you saw that its pipeline in the Red Sea burning.
10:01:33:23 – 10:01:36:23
Daniel Winter
What went through your mind?
10:01:37:00 – 10:02:05:23
Kate Dourian
The pipeline itself didn’t burn. It was the pumping stations. Which and the one that was severely damaged was the one closest to Yanbu, which is the terminal on the on the Red Sea, which was really the only conduit when, the Strait of Hormuz was effectively shut. But now we’re seeing a shift again, because now the Houthis are threatening shipping through the Bab el-Mandeb, which is the southern exit from, from the Red Sea, which is the fastest route to Asia, which is the main market.
10:02:06:00 – 10:02:27:07
Kate Dourian
So, I mean, they are squeezed on both sides. They have managed to increase, cargo shipments from Ras Tanura on the Gulf Coast, but that’s expensive and risky. Yanbu was less risky and less expensive. But now that’s being squeezed. So they have to go north to the canal. So it’s like a pincer movement. And they’re caught in the middle of.
10:02:27:09 – 10:02:32:05
Daniel Winter
But did you find this shocking that this happened? Did it surprise you at all?
10:02:32:08 – 10:02:58:22
Kate Dourian
Yes. I mean, the we’ve seen attacks on on Saudi infrastructure before. We saw the, the attack in 2009 on the Abqaiq, a gathering station which is the largest in the world. But the Aramco has a good record of repairing this kind of damage fairly quickly. This time, I think they had three pumping stations that were damaged. And I think what is surprising is the precision, these attacks supposedly came from Iraq.
10:02:58:22 – 10:03:21:13
Kate Dourian
So, but they did travel a long distance because, you know, you’re talking about a few miles from, from Yanbu. So I think that’s really the surprise. So they they’ve got attacks from the south, from the Houthis in the south. They’ve got Iraq. They’ve got, yeah, Iran, on the east. So I think, you know, they’re sort of facing, attacks on three fronts, which is also quite unusual.
10:03:21:13 – 10:03:28:00
Kate Dourian
And from what we see, the United States doesn’t seem to be that keen on providing any, any assistance.
10:03:28:02 – 10:03:35:21
Daniel Winter
Okay. And Andrew, Kate says it’s surprising when you first saw that. What went through your mind when the pumping station got hit?
10:03:35:23 – 10:04:06:22
Andrew Leber
Yeah. I mean, for me, seeing the pumping station get hit in the east was pipeline hit as well, was really, a sense that the Saudi rulers must be concerned about this, given that the East-West pipeline was really their major backup plan for the blockages and the blockade in the Strait of Hormuz, it’s really allowed Saudi finances to remain fairly stable despite this conflict, given that the kingdom has up until now been able to offload a significant amount of oil, a pretty elevated global prices out through the Red Sea.
10:04:06:24 – 10:04:42:24
Andrew Leber
But it was also really one two punch in that you had the demonstrated ability of Iraqi militias to take that pipeline offline at the same time as Houthi forces have effectively taken over most of the Red Sea coastline and heavily stated that they will threaten any Saudi shipments that move through the Red Sea. So this greatly limits both the ability of Saudi Aramco to move oil from the oil fields in the eastern part of Saudi Arabia to the Red Sea in the west, and also closes down options for Saudi Arabia to export oil beyond.
10:04:43:01 – 10:05:09:00
Daniel Winter
Okay. So I think we’ve managed to get a kind of overview of the situation from here and how much of a surprise it was for everyone. Involved, except obviously the attackers, though they will probably be happy as to how much of an impact this has had. And, Kate, that the pipeline that runs across the desert to the Red Sea port of Yanbu, as you mentioned, is Saudi, Saudi Arabia’s kind of escape route to avoid the Strait of Hormuz.
10:05:09:02 – 10:05:21:20
Daniel Winter
It’s now restarted. They say this East-West pipeline has come back online, fairly quickly. How much oil can it actually move right now? What is the state of things at the moment?
10:05:21:22 – 10:05:49:12
Kate Dourian
I haven’t actually seen it reopen. I mean, there was talk that it was about to reopen, and I haven’t actually seen confirmation. I may be wrong, but once it starts, the only the only route they can take is export through the Suez Canal. Now, tankers, large tankers, VLCCs. Can’t go through the Suez Canal, so they have to offload it and then reload again in the Mediterranean and then go all the way around the Cape to, to Asia, which is really the main market.
10:05:49:14 – 10:06:16:07
Kate Dourian
So I think that’s, you know, that’s going to limit the volumes. I mean, they were exporting 4 million barrels a day, through Yanbu. That’s crude. And also supplying their refineries, they still have about 1.5 million barrels a day refining capacity because the, the one of the refineries has been hit by by the Houthis, which was an export, refinery in the south.
10:06:16:09 – 10:06:44:22
Kate Dourian
So I think that’s, you know, that’s going to be they might they might just export more, from the, more products because, you know, they’re higher value the products. So, they might export more products through, through Yanbu because these smaller tankers can actually go through the Suez Canal. Which which makes it, a bit easier without having to offload and reload again, which adds to costs, which adds at the time and leads to congestion.
10:06:44:24 – 10:07:02:08
Daniel Winter
Okay. And yeah. So the people don’t have the map in their mind. Normally you think of the eastern side of, of Saudi Arabia, you have the Strait of Hormuz where oil can go out from Saudi, but also from Iran as well, and go to Asia and wherever else it needs to go. And that’s obviously obviously been blocked due to the war in Iran.
10:07:02:10 – 10:07:19:13
Daniel Winter
They would then normally just say, okay, we’ll resort to the Red Sea in order to export south. But now, because of the conflict in Yemen, that southern route is now blocked. And so they can only go north, but then it’s a much longer way round. And also you mentioned, oil products. Just very briefly, what do you mean by product?
10:07:19:15 – 10:07:22:24
Daniel Winter
So because it’s not just crude oil that’s caught up in this.
10:07:23:01 – 10:07:48:02
Kate Dourian
You know, I think we’re talking diesel. We’re talking jet fuel, we’re talking gasoline. I mean, if you look at one of the biggest refineries in the region is in Kuwait, the other refinery, and that was annexed by this, exporting a lot of jet fuel to Europe, for example. And that’s why we’re seeing and you’ve got, you’ve got a situation where Russia is not exporting any of these, of these fuels like diesel.
10:07:48:04 – 10:08:09:10
Kate Dourian
So I think you’re seeing diesel prices, which are at records in the States, are up to six, dollars a gallon. In in California, even higher, which is also a political liability for the Trump administration. So I think the you know, you look at the crude price, the crude price maybe at 100 and 103 at the moment, but diesel, you’re talking 200.
10:08:09:12 – 10:08:39:24
Kate Dourian
And, you know, if I look here in Italy where I am, people are shocked at the prices of diesel. I heard that in the States, some of the, gas stations, the filling stations don’t even dare put the price up because it’s just so volatile and so frightening to consumers. So. And of course, diesel is very important because it’s not only a transport fuel, it it feeds into other sectors agriculture, you know, transit, all all your goods are going to be affected by the rise in diesel prices.
10:08:40:01 – 10:09:05:05
Daniel Winter
Absolutely. And, Andrew, I know it’s a complex topic to fit into, into a small answer, but, you know, Saudi Arabia, trace the drones that hit the pipeline, or rather, the pumping station, at least to Iran aligned groups in Iraq, while the Houthis in Yemen are pushing along the Red Sea coast. So who are these groups and what do they want by attacking Saudi Arabia specifically?
10:09:05:07 – 10:09:26:21
Andrew Leber
Yeah. So in terms of Iraq, there are a number of militias that are aligned with Iran have been sort of an important so source, of course, of power for the Iraqi state over the past decade, like some of these militias were integral to the fight against ISIS back in the early 20 tens and have effectively been integrated into the Iraqi state.
10:09:26:23 – 10:09:52:11
Andrew Leber
But still a lot of these militias are not under central state control in Iraq. You know, whether they’re acting, you know, probably not acting at the direct order of Iran. But still want to demonstrate an ability to take part in this conflict, whether as a way to, like, boost support from among their own supporters to garner greater support in the region or just demonstrate that they’re an actor that can’t be ignored.
10:09:52:13 – 10:10:23:10
Andrew Leber
So to have a much longer history with the Houthis in Yemen, or as they call themselves Ansar Allah, Saudi Arabia led an intervention back in 2015 to try and remove the Houthis from power after they effectively took over much of the country. That kicked off a long running war that also saw the participation of the United Arab Emirates and other countries, more or less ended in a stalemate and massive reputational damage for Saudi Arabia because of the humanitarian crisis.
10:10:23:10 – 10:10:57:06
Andrew Leber
It contributed to and had effectively settled into a stalemate. Backed up by a UN organized cease fire from 2022. The Houthis didn’t take part in the earlier stages of the conflict. When Iran was retaliating against U.S. and Israeli attacks by striking Gulf states. But over the course of the summer has steadily expanded its coordination with Iran and its efforts to effectively break the stalemate in Yemen and force new facts on the ground on the unrecognized government of Yemen.
10:10:57:08 – 10:11:19:05
Daniel Winter
So they’ve seen what’s happened with the Strait of Hormuz and the blockade that’s going on there. And they’ve thought, we can also do the same thing, on the other side in the Red Sea. And, you know, what Iran has seen is that this obviously has had a ripple effect far beyond the region. And that is the leverage that Iran has.
10:11:19:07 – 10:11:35:07
Daniel Winter
Is that what the Houthis are seeing as well? And that’s the whole reason to to to attack is not just to harm Saudi Arabia, specifically the that that is a factor, but to basically take advantage of their leverage and cause that ripple effect worldwide.
10:11:35:10 – 10:11:58:05
Andrew Leber
Yeah. No, I think that’s exactly right. I think this is a situation where the Houthis are seeing Iran’s ability to garner both strategic relevance and, you know, potentially some concessions from very powerful actors by seizing strategic waterways. I think the Houthis are really being very careful to try and message this so that they don’t drag the United States in, if at all possible.
10:11:58:05 – 10:12:20:09
Andrew Leber
Certainly, President Trump is very much wavering on the day to day basis as to what he does here. But I think the ultimate aim for the Houthis is to gain greater leverage against Saudi Arabia and effectively get some kind of economic concessions under the table. What we’ve seen from Saudi Arabia is that, you know, they’re not willing to intervene militarily if the United States isn’t going to take the lead, at least not yet.
10:12:20:11 – 10:12:48:21
Daniel Winter
Okay. We’ll get to that kind of power balance from, with the US, a little bit later. But certainly the ripple effect, Kate, has been evident. I mean, Aramco has reportedly told at least two European refiners, including Poland’s, Orlen, that they’ll get no Saudi crude in October. Of course, that was before this, this reopening. But I imagine those delays do actually stack up, that there is a kind of shipment that, that accrues during that time.
10:12:48:23 – 10:13:02:16
Daniel Winter
So what does this mean in practice for a refinery that was counting on that oil? Is this still going to be, impactful on Europe? Let’s say?
10:13:02:19 – 10:13:23:03
Kate Dourian
I, I don’t think so much impacts on Europe because, you know, they do have other options. They are guessing, you know, this, us, this, African crude is going through. You’ve got Libya, you’ve got, well, Libya, there’s a mission. If I was just checking on the ambo, you said it’s the pipeline is not open. I think they’re testing it.
10:13:23:05 – 10:13:43:00
Kate Dourian
The idea was to bypass some of these damage sections. So I think we’re just getting a dribble. So it’s not completely open yet, which is surprising because it’s, you know, as I said, Aramco has a has a, a history of actually repairing damage relatively quickly. But I think, yes, you know, Europe is not such a big market,
10:13:43:01 – 10:14:05:11
Kate Dourian
But I think we’ve seen, you know, Poland has been buying, crude oil from some other sources. I think, the UAE was one I have to double check who was actually buying. But, yeah, they have canceled a but Aramco’s surprisingly is also offering on the on the spot market. So there’s been a change in the way that, that they’re managing their trades.
10:14:05:13 – 10:14:27:01
Daniel Winter
So there’s, there’s things that they can do to try and balance it out in some ways. And then of course, a lot will depend on whether these tests on the pumping station, actually lead to the pipeline coming online, as they had hoped that it would as soon as possible. But then comes the question, Andrew, you know, a long pipeline in the desert, hard to defend and cheap to hit.
10:14:27:03 – 10:14:45:09
Daniel Winter
What kind of power does that hand to armed groups, can Saudi Arabia even do anything about it? Yes, it can do perhaps more to protect certain critical aspects like the pumping stations, but it will probably be very difficult to protect the pipeline in its entirety.
10:14:45:12 – 10:15:04:00
Andrew Leber
Now, I think this is why we’ve seen the main response from Saudi Arabia thus far be to not escalate this, at least if the United States isn’t going to get involved. I think there’s a recognition in Riyadh that only, like some kind of political agreement will actually stop these attacks if there. So it’s because it does hand inordinate power to the attacker.
10:15:04:00 – 10:15:26:22
Andrew Leber
You just have to take the pipeline off once. Just one drone has to get through. This has been signaled since the start of the conflict. Even just the day after the cease fire was signed between the United States and Iran, a drone hit the East-West pipeline, I think, is an indication, a reminder to Saudi Arabia that it would be very easy to pull off this kind of attack in the future.
10:15:26:24 – 10:15:50:23
Andrew Leber
And Saudi Arabia’s own past experience with Yemen speaks to this. So in terms of the Houthis, the Houthis, prior to the UN organized cease fire, had demonstrated an ability to cause damage inside Saudi Arabia with pretty crude drones and rockets. And it was ultimately only a political agreement that stopped those attacks occurring inside Saudi Arabia, not anything Saudi Arabia was able to do with missile defense.
10:15:51:00 – 10:16:10:03
Daniel Winter
Okay. And then, what decides who gets the oil that’s left? I mean, Kate, maybe you could start maybe from the I know, is it the Aramco perspective? Is it the Saudi government perspective as to who gets what oil there is, or is it is it just a bidding war? Who’s going to pay the highest price?
10:16:10:05 – 10:16:30:00
Kate Dourian
I mean, they do have term contracts. So they, you know, these are the ones that they’re really trying to to, to meet. And I don’t think Aramco, when it comes to marketing, I don’t think the government generally is very much. So I think Aramco will just try to manage what it can with its term contracts. You know, if it’s a very, very long term.
10:16:30:00 – 10:16:49:21
Kate Dourian
So that’s why they’re taking the risk off of shipping from from the Strait of Hormuz. But you know, as I said, they also have stakes in refineries. So the only problem is that they were able to manage meeting customer demand because they had so much storage abroad. And, and, and along the Red Sea, they still have some storage.
10:16:49:21 – 10:17:19:05
Kate Dourian
So they could have exported, but obviously they didn’t. Because we saw a complete stoppage of, of exports from Yanbu. So I think that’s, you know, they haven’t declared force majeure. So they it is complicated trying to meet those commitments to your customers because they are without contracts that are signed for a full year. China is in particular, but I think they’re also being helped by the fact that Chinese imports are very, very much lower, kind of well before the conflict.
10:17:19:05 – 10:17:22:13
Kate Dourian
They are creeping up, but that has been a big help as well.
10:17:23:05 – 10:17:45:12
Daniel Winter
Okay. And just digging into the US aspect, because that’s something that we’ve touched on already. I mean, for decades, the rough deal was essentially that Saudi kept, oil flowing and that, America kept the Gulf safe. And you said that the Gulf states big failed bet was that the Trump administration cared more about making money than about a confrontation in Iran.
10:17:45:14 – 10:17:58:17
Daniel Winter
How much of that old bargain is still standing? Because we’ve seen, recently that, the US wasn’t, willing to ride to Saudi Arabia’s support in this conflict.
10:17:58:19 – 10:18:24:21
Andrew Leber
Where the Gulf states are now is that they’re kind of caught in the middle on this. They still depend enough on security ties with the United States for missile defense or other forms of national security, for merely supplying their military. So they’re not about to suddenly turn on the United States or abandon the relationship any time soon. But really, it’s going back years that they’ve seen that the investment and security relationship, it’s very easy for them to pay into this relationship.
10:18:24:21 – 10:19:06:15
Andrew Leber
Buying weapons, investing in the United States, coordinating with the United States on national security goals. It’s very hard to get things back from the United States on this. So 2019, under President Trump’s first term, we saw, that the Abqaiq oil refinery complex in Saudi Arabia was attacked and the United States pretty much shrugged. And throughout this war, we’ve seen, many Gulf states, like Saudi Arabia, like the UAE that spent 20, 25 investing both in the economic relationship with the United States and, honestly, the economic, interests of the president himself, have found that it’s actually very hard to leverage those investments to get the United States to get
10:19:06:15 – 10:19:26:24
Andrew Leber
involved in a conflict or to even not get involved in a conflict. When doing so is more in the interest of the Gulf states than whatever President Trump wants. So, they found that they don’t have the leverage to get him to intervene in Yemen. They don’t have the leverage to get him to actually sign a deal with Iran or to kind of leave the region.
10:19:27:01 – 10:19:29:17
Andrew Leber
So they really remain trapped in this relationship.
10:19:29:19 – 10:19:56:21
Daniel Winter
But it seems that previous administrations had essentially bet that, we need to keep supporting, Saudi in the Gulf states because otherwise they could, go to China essentially and become China’s best friend. How much is that a risk? You know, why would Riyadh maybe turn to Beijing, for example, to lean on, Iran to rein in the Houthis, rather than Washington, because it seems that the US hasn’t been the stable partner.
10:19:56:23 – 10:20:03:19
Daniel Winter
But is it really in the US interests to not be a stable partner if China is on the other end?
10:20:03:21 – 10:20:30:09
Andrew Leber
I think that’s always been a bit of a boogeyman that, like Saudi leaders have raised in Washington, the sense of like, oh, if you don’t sell us these weapons, if you criticize our human rights record too much, we can always turn to China. Whereas when Saudi elites talk among themselves about foreign policy and there’s a broad recognition that China has no appetite or even capacity to get involved militarily in the region, we do see outreach to China and a handful of areas.
10:20:30:09 – 10:20:57:02
Andrew Leber
So when the United States won’t sell particular technology to Saudi Arabia like ballistic missiles, then Saudi Arabia will turn to China when it’s convenient to bring China into something to signal that they are distant, that Saudi Arabia has distanced itself from the United States, as happened when Saudi Arabia normalized ties with Iran, then that’s useful. Beyond that, it’s kind of just, you know, out of desperation to try to turn to China in the hope that they can intervene somehow.
10:20:57:02 – 10:21:15:00
Andrew Leber
So we’ve seen Saudi Arabia reach out to China to try and get Iran to somehow restrain the Houthis in Yemen. But China’s approach, that is effectively to say, sure, we’ll pass along some messages, will let people know this isn’t great, but like, we’re not going to, you know, we’re not going to put much, you know, coercive leverage behind that.
10:21:15:00 – 10:21:25:10
Andrew Leber
So I think there’s a growing recognition in Saudi Arabia, or maybe there always was recognition that China’s not going to be able to play the geopolitical role. They’ve counted on the United States to play.
10:21:25:12 – 10:21:46:13
Daniel Winter
Okay. And Kate, what’s your opinion on that? I mean, do you have a counterpoint to that? Because the the counterpoint one could bring up is that China buys the vast majority of Iran’s, seaborne oil. So that gives them some leverage there. It’s also Saudi Arabia’s biggest customer. So how much leverage does that give Beijing over Tehran, for example?
10:21:46:15 – 10:21:52:24
Kate Dourian
I do I think they do have some leverage, but they’ve chosen not to use it.
10:21:53:01 – 10:22:05:16
Kate Dourian
You know what China is doing? China’s investing a lot. So they I think they they do a lot of soft power. They they are the biggest investor. They’ve overtaken the EU, with their investments in the GCC countries in certain in certain sectors.
10:22:05:18 – 10:22:11:12
Kate Dourian
But I think as, you know, as we heard, they don’t really have the military power.
10:22:11:14 – 10:22:23:13
Daniel Winter
Okay. But Andrew, isn’t it in China’s interest to be active in the region, to be a counterpoint, to the US to secure, oil supply?
10:22:23:15 – 10:22:41:05
Andrew Leber
It’s really kind of a paradox. I mean, for you can go back like decades. And the people in the policy community in the United States keep kind of making this case to the Chinese officials. Like, it’s definitely in your interest, based on this chart of how much oil you consume. Sorry for my ancestors here, but, they, they, they never actually follow through on that.
10:22:41:05 – 10:23:10:07
Andrew Leber
The view in China is that. So you’re telling us that in the United States policy community, the Middle East is viewed as a strategic quagmire in which the United States has been pulled into conflict after conflict for no clear economic benefit, while mostly investing in a securitized relationship. While we China are able to enjoy a great economic relationship that’s entirely in our interest and we don’t have to get involved in the security side, I think there’s just really little appetite to get involved in the conflicts of the region.
10:23:10:13 – 10:23:33:11
Andrew Leber
It’s much easier to just sit back and say, hey, if you all could sort this out, we’re happy to buy any oil that comes out that may change if we really hit a crisis situation that is directly impacting China’s ability to just meet daily energy needs. But unless or until that happens, I don’t expect them to get involved in the geopolitics of the region.
10:23:33:13 – 10:23:54:02
Daniel Winter
Okay, I think that’s such a good point from kind of the Chinese perspective of how they see this. I think that’s really interesting. So I kind of just want to wrap things up here, with Kate, my kind of final question to you is, I mean, you wrote in July already that, there will be no return to the status quo after the Hormuz crisis.
10:23:54:04 – 10:24:03:15
Daniel Winter
So when this war eventually ends, how will the way Gulf oil reaches the world look different?
10:24:03:18 – 10:24:24:14
Kate Dourian
It depends. I mean, at the moment the, the, the oil that is getting out and I mean, we are seeing about 12 million barrels compared to about 12, 20 million before the conflict. And that’s due to the fact that the US Navy is present and it’s escorting and it’s aiding, those shipments to come through. I just wonder how long that presence can, can last.
10:24:24:14 – 10:24:44:24
Kate Dourian
I mean, you cannot. It is still the fastest. Asia is a growth market. It is still the fastest route. All these countries, except for Saudi Arabia, which has the option, and the UAE, which has options for that. It doesn’t mean that Fujairah has not been targeted for attack. It doesn’t mean that Oman is, is not going to be targeted in the future.
10:24:45:05 – 10:25:10:09
Kate Dourian
So everybody’s going to be looking at alternatives. I know Saudi Aramco is they want to they’re looking at another pipeline maybe going through Oman. And the UAE is already expanding its pipeline capacity to Fujairah, which will be ready by by early 2027. But you know, all the other options Kuwait is stuck are we’ve just heard Qatar saying they don’t have any pipeline plans because, you know, you can’t get LNG into a pipeline.
10:25:10:11 – 10:25:30:01
Kate Dourian
So, you know, unless Hormuz opens, you really, really cannot have these alternatives that work. They take a long time. So I think that’s why the, the, the GCC countries don’t really want to escalate with Iran. They want to see a resolution. They don’t want Iran to be in control. So I think it’s a bit of a quandary.
10:25:30:01 – 10:25:49:10
Kate Dourian
But at the end of the day, everybody is going to be looking at a potential, Hormuz bypass. It’s going to take time. And in the meantime, you just have to, accept that there is a situation that is, I mean, let’s face it, Hormuz was open. There was always a threat. We always lived with the threat.
10:25:49:10 – 10:26:11:15
Kate Dourian
I lived in Dubai for sort of 18 years, on and off. We always thought about the possibility that Iran might cause mischief, not shut it down completely, which was the shock when the attacks came by the US and Israel that that gave them the, the, the reason to go and shut it down. So, yeah, I don’t think we can go back to normal because Iran now has demands.
10:26:11:16 – 10:26:28:23
Kate Dourian
So I think we are going to be in a sort of no peace, no war, case attacks on tankers, shuttle services. But I don’t think it can be something that, can be sustained for a long period of time. Something has to give.
10:26:29:00 – 10:27:02:16
Daniel Winter
Okay. So no return to normal. And, Andrew just picking up on that, it’s clear that, Saudi Arabia, also the wider GCC countries, they’re at this kind of pivot point of geo economics at the moment, or crossroads, kind of symbolizing all of the major issues that are going on at that big macro level. You know, if you were to advise Mohammed bin Salman as to what to do, in this situation and how to balance all of these, extraordinary, difficult combinations, and, and conflicts, what would you say?
10:27:02:18 – 10:27:06:02
Daniel Winter
What is the way forward for Saudi Arabia?
10:27:06:04 – 10:27:31:08
Andrew Leber
I would have a very different job in that case, but, Yeah. No, I mean, I think that the advice against trying to find a military solution for this is sound. I think you see this circulating in some Saudi commentary that the way forward on the diplomatic front is very uncertain, very unsteady, but simply trying to, you know, launch attacks, launch airstrikes in the hope this is going to change something.
10:27:31:08 – 10:27:57:10
Andrew Leber
We’ve seen that again and again since the start of this conflict. And at no point in this is it produced the kind of decisive breakthrough that advocates suggested. So I would generally focus on. Yeah, continuing to maintain diplomatic channels, continuing to try to encourage things back towards some kind of agreement. But also kind of a not assuming that the status quo will hold forever.
10:27:57:10 – 10:28:25:02
Andrew Leber
I think there was a belief of, well, we’ve got to, you know, cease fire with the Houthis. We don’t need to either get a peace agreement or invest in the capacity of the government of Yemen. I think you can do both of those things. Both try to, like, push for an actual diplomatic solution, but also invest in the unity and capacity of the government of Yemen as more than just a collection of different factions that are dependent on Riyadh.
10:28:25:04 – 10:28:43:20
Daniel Winter
Okay. So I think we’re agreed that while there is definitely room for things to be done, there could eventually be peace on the horizon, but that there is no going back to the way things were before, especially now that these new choke points have become so clear and so proven to be choke points that they’ll become tempting to use in the future.
10:28:43:22 – 10:28:48:17
Daniel Winter
Fascinating conversation, Kate and Andrew, thank you very much for joining me today.
10:28:48:19 – 10:29:04:03
Daniel Winter
That’s it for this week on The Dip. Thank you very much for tuning in. Don’t forget to leave a comment or a question any feedback is welcome wherever you’re listening to this or watching it too. And if you’re not subscribed in the podcast app of your choice, go ahead and do so.
10:29:04:03 – 10:29:07:23
Daniel Winter
Just look for The Dip. But until next time, thank you very much for watching.