Throughout history, we have heard about various attacks, may it be by terror groups or due to wars among countries. One such attack happened recently that gained much attention and has a huge impact all across the globe. This is the drone strike in the oil refineries of Saudi Arabia on 14th September whose oil reserves are second largest in the world and supply nearly 16% of oil in the world.
As of now, it has been calculated that 18 drones and 7 cruise missiles were used in the attack but the direction from which the missiles were launched.
The drones were used to attack the state-owned Saudi Arabian oil companies processing units in Abqaiq and Khurais in eastern Saudi Arabia. The Houthi movement in Yemen claimed responsibility, tying it to events surrounding the Saudi Arabian intervention in the Yemeni civil war but the direction of launch of missiles proves that it was not Yemen who was behind the attack. As also confirmed by the Saudi Arabian officials, the missiles were of Iranian manufacture though Iran has declined to any link being there between them and the strike. This is not the first time that Iran is showing an aggressive behavior towards Saudi Arabia. This year in May there was an incident reported where Iran had taken over 2 oil ships heading Saudi Arabia and damaged them. This supports the fact that Iran and Saudi Arabia are obviously not in the best terms with each other and, although the entire world is blaming Iran for the drone strike, it is yet to be actually proved.
The attack has caused large fires at the refineries and they have also been shut down for repairs thus reducing the Saudi Arabia’s oil production to half which represents about 5% of global oil production or we may calculate it as a loss of 5.7 million barrels each day. According to Saudi Arabia’s energy minister, the refineries will be fully functional by end of September and they plan to use their oil reserves for any interim export orders. But the point is that for how long can we depend on the existing reserves as the demand of oil like always is ever lasting. Bob McNally, a former member of the US’ National Economic Council and National Security Council, told Reuters that “a successful attack on Abqaiq would be akin to a massive heart attack for the oil market and global economy”. Thus it is clear that there will be various implications whose impact will be different all over the globe.
The immediate after effects included a 19% surge in global oil prices which was the maximum increase after the Gulf War in 1991. Thinking along financial lines, drones not costing more than $150000 brought up a loss of billions globally. Luckily there weren’t any casualties in form of human life but major infrastructural damages were there to the existing products and future products. India is also one of the major countries that have been affected as it fulfills 83% of its crude oil needs by imports from other countries and considering the fact that Saudi Arabia is our second largest source of crude oil coming after Iraq, the continuous hike in prices will surely hurt India’s economic growth. This hike in prices will lead to an extensive problem of inflation as oil is a basic raw material and we cannot possibly replace it completely. May it be for used as fuel or for manufacturing of rubber, oil is needed by every economy in this world. Not just India, Saudi Arabia was one of the main sources of fuel for many countries and this will lead to not only fiscal deficit in their economies due to high price but also reduce their output value as there will be shortage of oil available for production.
Reading the recent statements by US, we can see that they blame Iran for the strike and this has built a war like situation between US and Iran. At the same time Iran has given statements exclaiming that it won’t sit silently if it is attacked. Thus, there is a war like feeling among both the nations which will be destructive for the entire world. US though has its own reserves of oil but is it completely independent for its oil requirements? Even if it is right now, then for how long will these reserves last? Or will US look at Iran ever as a last resort for its oil requirements?
This attack might just be the beginning to a much larger course of destruction but for how much longer can we survive these. If there’s another such attack then, the loss to the world economies can’t even be imagined at this time. The inflation rates would be out of the controllable limits and it could depreciate the currencies of countries leading to a chain of effects harming the countries individually and the world as a whole.
The fact that was it Iran or not behind the attack still is a mystery but the implications of this attack on the world economy is clearly visible with the falling graphs. Also it can be surely said that another attack and we might be facing the worst crises Earth has ever seen in its history as there would be wars engaging among countries and at the same time no production in the others.