The Al-Qaeda threat to Saudi Arabia’s Oil Sector

Vol. 4, No. 13    December 28, 2004

• In the attack on the American consulate in Jedda on December 6, for the first time, al-Qaeda mounted an assault on a “fortified” American facility rather than attacking soft targets.

• When it turned out that nearly all the victims were Muslims, many Saudis, who were at first pleased by the U.S. humiliation, strongly condemned al-Qaeda. Even the families of the four terrorists killed in the consulate’s courtyard were denounced by their kin.

• On December 15, 2004, in an audio recording, bin Laden said “oil prices should be at least $100 a barrel,” and called upon Persian Gulf militants to exert themselves to prevent the West from getting Arab oil by attacking oil facilities all over the region. This was the first time that al-Qaeda’s leadership had openly divulged its strategy of hitting the Western economy by disrupting oil supplies and causing prices to skyrocket. The following day, NYMEX crude spiked by 5 percent to $46.28 a barrel.

• While Saudi Arabia’s Persian Gulf oil production facilities are largely in Shi’a eastern Arabia, it is extremely difficult, if not impossible, to totally prevent extremists ready to sacrifice their lives in Allah’s name from infiltrating Aramco’s workforce, or otherwise hitting weak spots in the oil industry. Even an abortive attack on the Arabian oil network would seriously spike oil prices.

• Although no longer a serious threat to the Saudi regime, the remaining al-Qaeda cells have now been directed to target the region’s oil industry. Al-Qaeda’s new “oil jihad” could threaten the regime’s stability and could undermine the supply of oil to the industrial countries.

Saudi al-Qaeda Attacks a Fortified American Facility

The attack on the American consulate in Jedda on December 6 marked a turning point in Saudi al-Qaeda’s anti-Western (U.S.), anti-regime operations. For the first time, Saudi mujahidin mounted an assault on a “fortified” American facility rather than attacking soft targets, such as expatriates’ housing compounds or individual Western oil and other experts. Not surprisingly, the highly paid experts, who stayed in Saudi Arabia (but evacuated their families) despite the murderous attacks on individual oil-related personnel in Yanbu and Riyadh, told journalists that what happened in Jedda further emphasized Westerners’ vulnerability. Moreover, the Jedda attack illustrates that, despite the heavy losses it has suffered since last year, Saudi al-Qaeda is still capable of launching serious, although limited, operations in the kingdom.

Yet the well-prepared attack on the U.S. consulate in Jedda by a cell of only five terrorists demonstrates the success of Crown Prince Abdallah’s iron-fist policy that has led to the killing or incarceration of most of Saudi al-Qaeda’s leaders and veteran militants. Indeed, Fayiz bin Awad al-Juhaini, said to be the Jedda attack’s leader, was only 28 (too young to have been an Afghani veteran). Earlier, Juhaini served in the Al-Madinah mutawwa (morality police) and was fired for “bad behavior.”

Moreover, when it turned out that nearly all the victims of the consulate attack were local or foreign Muslims, many Saudis, who were at first pleased by the U.S. humiliation, strongly condemned al-Qaeda for disrupting the kingdom’s stability. Even the families of the four terrorists killed in the consulate’s courtyard (the fifth was wounded and arrested) were denounced by their kin who, despite the custom, did not hold a wake for them.

However, the U.S. embassy spokesman in Riyadh told the news media that al-Qaeda’s attacks on Western experts in Saudi Arabia, as well as attacks on Saudi and American installations, were far from over, and that attempts to sabotage the Persian Gulf oil industry should not be ruled out, despite President Bush’s assurance on December 7, 2004, about the Saudi regime’s stability and ability to participate in the war against international terrorism.

Eighty Percent of the Saudi Budget Comes from Oil

According to Middle East Economic Survey,¹ Riyadh’s 2005 budget (published December 8, 2004) is projected to be $74.7 billion, of which 80 percent (about $61 billion) is to be generated by the sale of oil (as in the past), assuming (for budgetary purposes) that the average price for 2005 is $25 a barrel and production amounts to just under 9 million bpd (last year’s oil price projection left Riyadh with an enormous surplus). The kingdom’s revenue from all sources is forecast to be about $100 billion in 2005 ($104.8 billion in 2004).

An incremental budgetary expenditure of $17.3 billion in 2004 was largely allocated to strengthening “national security” and pay two months’ salary bonus to the military. In addition, the substantial windfall that Riyadh enjoyed in 2004 (and is likely to garner in 2005) enables the regime to “buy” its population’s goodwill and finance job creation for its numerous unemployed youth lacking proper training, who abhor jobs related to manual work.

About a fourth of the national budget ($18.7 billion) is allocated to the education sector. This is in line with Crown Prince Abdallah’s efforts to reform the religion-oriented education system and provide Saudi youngsters with suitable skills to compete with expatriates for available jobs. For some time, al-Qaeda has been cognizant that Riyadh’s increased revenue from oil was offsetting its endeavors to undermine the regime. Yet, until recently it was careful not to directly target the kingdom’s oil industry, considered by Saudis to be essential for their welfare.

Al-Qaeda’s Strategy: Use Oil to Undermine the West

On several occasions since 2002, both Osama bin Laden and his deputy, Ayman Zawahiri, have called on OPEC’s Arab members to reduce the supply of oil to the West and thus push oil prices up in order to fight the “crusaders.” As the guerilla warfare in Iraq has escalated since the end of 2003, it has become increasingly evident that the country’s oil production has become a major target of the Iraqi/Arab guerillas. The occasional murder of Western oil experts in Saudi Arabia and attempts to hit targets related to oil production (such as the attempt to bomb Iraq’s three Persian Gulf terminals and the recent attack on Aramco’s Al-Khobar residential compound) were part of al-Qaeda’s strategy to undermine the Western economy.

On December 15, 2004, in an audio recording aired on an Islamic Internet site, bin Laden attacked the Saudi regime for being “agents of infidels,” as well as driving the kingdom’s population to poverty, while helping enrich the U.S.-led, “anti-Muslim” West. Moreover, bin Laden stated that “oil prices should be at least $100 a barrel,” and called upon Persian Gulf militants to exert themselves to prevent the West from getting Arab oil by attacking oil facilities all over the region. Bin Laden also encouraged all mujahidin “to stop the biggest theft in history as the West has been buying oil at a cheap price.”² This was the first time that al-Qaeda’s leadership had openly divulged its strategy of hitting the Western economy by disrupting oil supplies and causing prices to skyrocket. Consequently, on December 16, current month NYMEX crude spiked by 5 percent to $46.28 a barrel.

Bin Laden’s call for an “oil jihad” was followed by a web site message from the Arabian Peninsula al-Qaeda to all the mujahidin in Arabia, wherever they are, to focus on oil targets in their struggle against the infidels and their Saudi allies.³ Yet some Western politico-strategic analysts practically dismissed al-Qaeda’s ability to hit the heavily protected (by both Saudis and the U.S.) Persian Gulf oil production facilities (other than in Iraq). They claimed that even if the militants were to succeed in sabotaging an oil pipeline or installation, it would not seriously impact the immense regional oil production network. This is because al-Qaeda lacks the means and support base in eastern Arabia, where the largely Shi’a population’s livelihood depends on the oil industry. Saudi Aramco has even claimed that a flight of frightened Western experts would not undermine its operations, as over 90 percent of its managerial and technical staff are now Saudis.

Although Riyadh and its smaller Persian Gulf allies have greatly beefed up their oil installations’ security,⁴ it is extremely difficult, if not impossible, to totally prevent extremists ready to sacrifice their lives in Allah’s name from infiltrating Aramco’s workforce, or otherwise hitting weak spots in the oil industry’s security complex. Moreover, even an abortive attack on the Arabian oil network would seriously spike oil prices and temporarily slow oil production. This is especially true if a terrorist attack were to be aimed against sites such as Ras Tanura, the world’s largest terminal, or the huge Jubayl industrial city.

Al-Qaeda No Longer a Serious Threat to the Saudi Regime

It appears that the erosion of al-Qaeda’s power and support in Saudi Arabia has convinced bin Laden that his aspirations to bring down the al-Saud regime in the near future are unrealistic. Indeed, official Arab sources claim that the attack on the U.S. consulate in Jedda was partly motivated by the persecuted jihadists’ wish to win media coverage to prove that they are still around⁵ and win back some of the popular sympathy they have gradually lost since mid-2003.

Sa’ad al-Faqih, head of the London-based (pro-bin Laden) Movement for Islamic Reform in Arabia (Islah), by using his television and radio stations and web site, called his fundamentalist followers in Saudi Arabia and other opponents of the Saudi regime, especially in Riyadh and Jedda, to launch anti-Saud demonstrations in the kingdom on December 15 (the same day that bin Laden’s tape was aired). A similar call for demonstrations by al-Faqih in October 2003 brought to the streets of Saudi Arabia’s major towns several thousand demonstrators, who were mercilessly beaten or arrested by the security forces. However, this time al-Faqih’s call for demonstrations failed because of changed circumstances and preemption by the regime, which positioned large forces at the demonstrations’ venues. Only a few score diehards attempted to demonstrate and were forthrightly dispersed or incarcerated.

The would-be demonstrators won no sympathy from passers-by. Indeed, this time radical ulama distanced themselves from al-Faqih-initiated demonstrations. Safar al-Hawali, the most respected militant alim, who fiercely criticized the Saudi regime as early as 1981 and was considered bin Laden’s mentor, told journalists, “Reform is needed, but not the al-Faqih way.” Indeed, what al-Hawali said about al-Faqih could be considered a rebuke to al-Qaeda’s operations in Saudi Arabia and another sign of the waning support for it in the kingdom.

Saudi al-Qaeda’s power and support base have suffered grave blows since mid-2003. Nevertheless, it is still active, although on a more limited scale, and its dispersed cells are led by the remaining “Afghani” veterans and some younger fanatics, the product of the Wahhabi education system and the increasing financial hardship experienced by the Saudi masses since the late 1980s.

Although no longer representing a serious threat to the regime, the remaining al-Qaeda cells have now been directed to target the region’s oil industry and not just Western experts employed by Aramco, or institutions related to it. Thus, al-Qaeda’s new “oil jihad” could threaten, to some extent, the Saudi economy and the regime’s stability. Indeed, it could also undermine the supply of oil to the industrial countries and interfere with their economic growth.

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Notes

1. Middle East Economic Survey, December 16, 2004.
2. Al-Quds al-Arabi (London), December 17, 2004.
3. AP and Financial Times, December 19, 2004.
4. Dow Jones, December 17, 2004.
5. Al-Sharq al-Awsat (London), December 8, 2004.

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Mordechai Abir is a Fellow of the Jerusalem Center for Public Affairs and Professor (Emeritus) of Islamic and Middle Eastern Studies at the Hebrew University of Jerusalem. His books include Saudi Arabia: Society, Government and the Gulf Crises (1993) and Saudi Arabia in the Oil Era: Regime and Elites: Conflict and Collaboration (1988).