Israeli and Iranian strikes on oil and gas facilities rattle global markets

Geoff Bennett:

Well, as the attacks on energy facilities continue across Gulf countries, we look now at the effects of those strikes and get some insights on the nation's in the crosshairs.

Ambassador Susan Ziadeh spent much of her 20-year Foreign Service tenure focused on the Middle East, including serving as U.S. ambassador to Qatar. She is now senior adviser at the Center for Strategic and International Studies. That's a think tank here in Washington.

Thank you for being with us.

Susan Ziadeh, Former U.S. Ambassador to Qatar: Thank you.

Geoff Bennett:

In the last few days, as you well know, the Iranians have struck a Saudi Arabian oil facility on the Red Sea, a natural gas complex belonging to Qatar, and oil facilities belonging to the UAE. Our viewers can see them all there on the map.

What stands out to you as being significant about those facilities?

Susan Ziadeh:

Well, first of all, the breadth of the number of countries that have been hit. This isn't directed at one country, but at all -- a number of countries in the Gulf Cooperation Council, known as the GCC.

The one -- the hits against the SAMREF, which is the Saudi Aramco refinery, which is jointly owned with ExxonMobil, is in Yanbu. Yanbu is on the Red Sea, and that's at the end of the east-west pipeline, which was designed to get around the problems of the Strait of Hormuz and shipping out of the Strait of Hormuz.

So, in essence, the Iranians have hit plan B by hitting Yanbu on the Red Sea. In terms of some of the other facilities, they struck in Fujairah, which is also a port at the end of the pipeline in the United Arab Emirates, which is also outside of the Straits of Hormuz, and tankers have been unable to go and fill up there at the Port of Fujairah due to strikes.

Now, the hit on Ras Laffan in Qatar is a whole different issue.

Geoff Bennett:

In what way?

Susan Ziadeh:

All right.

Well, first of all, it is the lifeline for Qatar in terms of its exports of liquefied natural gas, LNG. Twenty percent of the world's LNG exits from the Strait of Hormuz from Qatar. And so it's a huge complex, maybe $26 billion to build it up over the last 20 years.

It was hit. Two of the 14 trains, the trains which produced the LNG were hit. Interestingly enough, two of those trains had investments from ExxonMobil as well, so it does affect U.S. companies, and one GTL facility, which is the facility that does jet fuel and other kinds of fuels.

Geoff Bennett:

I also want to ask you about the South Pars gas field, which we heard our correspondent report about. These Iranian strikes were preceded by an Israeli strike on that gas field. How important is that complex, the South Pars complex?

Susan Ziadeh:

OK.

So the South Pars gas field is part of a larger gas field, which is jointly owned between Qatar and Iran, about two-thirds Qatar, one-third Iran. The South Pars produces gas mostly for domestic use in Iran. So, 90 percent of Iran's electricity comes from the gas that's produced in South Pars, as well as cooking gas, heating fuel, et cetera.

The other part of the gas field, which is the Qatari side, is the one that is more productive. And 20 percent of the world's LNG is produced there and exported through the Straits of Hormuz, in addition to not only liquefied natural gas, but fertilizers and, interestingly enough, 30 percent of the world's helium, and helium used not only for medical imaging, but most importantly for semiconductors in technology.

Geoff Bennett:

How are Gulf leaders broadly viewing the war at this point?

Susan Ziadeh:

They didn't want it. They argued vociferously against it, because they could foretell what was going to happen. And exactly as they laid it out, this is what has happened.

So they're very angry about it. And now, of course, they are at odds, to put it mildly, with Iran in this situation. And so they're in a place where they didn't want to be, for sure.

Geoff Bennett:

Could the nature of how the U.S. launched this war fundamentally change the long-term relationship with Gulf countries?

Susan Ziadeh:

Well, I think the Gulf countries have invested a lot of energy and time and money in their relationship with the United States, the establishment of bases, a lot of military training, a lot of joint exercises under CENTCOM, which is Central Command.

So they have a long-term view of their relationship with the United States. And I don't think that that fundamentally will change at this point in time. What might change is a little bit of hedging. In other words, if they have all their eggs in the U.S. basket, should they maybe develop relations with a few other countries, whereby they could have an additional layer of security or engagement, either from Europe, like France or the U.K., or perhaps from the adjoining countries in the world?

Geoff Bennett:

In your view, these strikes by Iran on these oil fields, which we spoke about, is this a deliberate broadening of the battlefield by Iran, or is this in some ways a sign of desperation?

Susan Ziadeh:

It could be both, but definitely it's a broadening of the battlefield.

I think Iran wants to put pressure on the United States and put pressure on these countries to stop. They're looking at the economic leverage that bombing these areas would bring and closing off the Straits of Hormuz. And they understand what affects the global economy. And I think they're looking at this as a possibility of trying to push towards a better solution for Iran.

Geoff Bennett:

What are the red lines for the Gulf states? Can we see a direct war between Iran and its Arab neighbors here?

Susan Ziadeh:

That's a tough question, in the sense that they didn't start this war, they didn't want this war, and now they're in the middle of it.

I think what goes into their thinking is, they want to best position themselves to not have to endure this kind of situation in the future, but also they're mindful of geography. And they're mindful that, at some point in time, the United States, when the war is over and they pick up and they go home, and they're left kind of holding the mess.

And what does that mean in terms of their relations with Iran? So I think they would like to move to a more diplomatic solution, and they would like to find a modus vivendi with Iran that secures their interests and make sure that this doesn't happen again.

Geoff Bennett:

Ambassador Susan Ziadeh, great to speak with you. Thank you for your insights.

Susan Ziadeh:

My pleasure. Thank you.