Yemen's Iranian-backed Houthis threaten oil companies in UAE and Saudi Arabia

Yemen's Iranian-backed Houthi rebels have threatened oil companies in the UAE and Saudi Arabia, a military spokesman said Oct. 2, as Tehran faces more stringent US sanctions amid a stalemate in nuclear talks.

"If the Saudi and Emirati coalition continue to deprive our Yemeni people access to their resources, our military forces can, with God's help, deprive them of their resources," Yahya Saree said on twitter.

"As long as the American-Saudi aggression countries are not committed to a truce that gives the Yemeni people the right to exploit their oil wealth in favor of the salary of the Yemeni state employees, the armed forces give oil companies operating in the UAE and Saudi Arabia an opportunity to organize their situation and leave."

Previous Houthi attacks on energy infrastructure in Saudi Arabia and the UAE, two of OPEC's top producers, have helped oil prices spike.

Platts benchmark Dated Brent was assessed Sept. 30 at $87.92/b, down 2% on the day. The marker has erased all gains since Russia's Feb. 24 invasion of Ukraine amid fears of a global recession, high inflation and a strong dollar.

OPEC+ ministers are due to meet Oct. 5 in Vienna, the first in-person meeting since the onset of the pandemic, to discuss cutting November production levels by as much as 1 million b/d, delegates have said.

Abqaiq attack

The Houthi militants, who have been engaged in a war with Saudi Arabia since 2014, have previously claimed responsibility for several attacks on Saudi Arabia's energy infrastructure, including pipelines and refineries, as well as vessels in waterways such as the Red Sea.

The most high-profile incident in Saudi Arabia claimed by the Houthis was in 2019 when armed drones hit Saudi Aramco's giant Abqaiq oil processing facility, knocking off about 5% of the world's global oil supply and sending oil prices soaring.

The UAE -- Saudi Arabia's ally in its war in Yemen -- has also found itself increasingly targeted by militants earlier in 2022, with Houthis claiming an attack in January on storage tanks owned by Abu Dhabi National Oil Co., the UAE's biggest energy producer.

Energy and oil supply security issues have been brought into even sharper focus since Russia's invasion of Ukraine raised concerns over potential disruptions and shrinking global spare capacity.

Following a spate of incidents in March, the Saudi Ministry of Foreign Affairs said the kingdom would "not be responsible for any shortage in oil supplies to global markets in light of the attacks on its oil facilities."

Gulf officials have been dismayed by what they see as the US' disengagement from the region.

Stalled nuclear talks

Gulf officials are also wary of any potential US-Iran nuclear deal, which has stalled following months of negotiations.

The US has slapped new sanctions on companies involved in Iran's energy sector to deter Tehran from selling its oil and petrochemicals.

As negotiations to rein in Iran's nuclear program have stalled, the US has ratcheted up its enforcement of sanctions on Iran's oil and petrochemical sales, cracking down Sept. 29 on several international brokers and front companies that have facilitated exports to buyers in Asia.

The 2015 Joint Comprehensive Plan of Action set restrictions on Iran's nuclear program in exchange for relief from US sanctions. The Donald Trump administration reimposed sanctions on Iran's oil, petrochemicals, shipping and other sectors in 2018. Talks to revive the deal have again hit a roadblock, with US officials contending that certain demands from Tehran are outside the scope of the JCPOA and stand in the way of reaching agreement.

Restarting nuclear controls on Iran could lift oil sanctions and return as much as 1 million b/d to the tight global market that has few options for near-term incremental supply.

S&P Global Commodity Insights, citing shifting goal posts and dragged-out talks, no longer assumes an Iran deal will happen this or next year, which would keep Iran's crude and condensate exports around 800,000 b/d at most.