Saudi Arabia's dilemma as it tries to stay out of US-Iran war

Saudi Arabia is confronting a difficult dilemma. Since the United States and Israel initiated military action against Iran on 28 February, the kingdom has largely sought to remain outside the conflict. However, after coming under attack from three directions, Saudi officials say they have reached their limit. This week they carried out coordinated strikes with U.S. forces against Iranian‑backed militias in Iraq, which Riyadh holds responsible for launching drone attacks on its territory. The kingdom now weighs whether to continue retaliatory strikes as a deterrent or to pursue de‑escalation, possibly through financial concessions to adversaries. The broader struggle features two opposing blocs. On one side lies Iran and its Islamic Revolutionary Guards Corps (IRGC), allied with the Houthi movement in Yemen—a tribal faction that seized much of the country in 2014—as well as Iraq’s Popular Mobilisation Forces, a paramilitary group accused of conducting thirty drone strikes on Saudi sites and now itself targeted in return. Hezbollah in Lebanon, though still a potent force, is presently inactive. Opposing them are the United States, operating through Central Command (Centcom), together with the Gulf Arab states and Jordan. Israel remains a close U.S. partner but is not an active participant in the current hostilities. Iran has intensified drone and rocket fire against Jordan, Kuwait and Bahrain, while also seeking to disrupt commercial shipping that attempts to transit the Strait of Hormuz while evading Tehran’s new navigation rules. The recent involvement of Iraqi militias and the Houthis in Yemen illustrates how, absent a durable U.S.–Iran accord, the region risks becoming ever more entangled in an expanding confrontation. Several factors explain Saudi Arabia’s reluctance to be drawn into a full‑scale war. Its de facto ruler, Crown Prince Mohammed Bin Salman—relatively young—has steered the nation toward Vision 2030, a program designed to lessen dependence on oil revenues by fostering vibrant, home‑grown industries capable of employing the hundreds of thousands of graduates and school leavers entering the labor market each year. Vision 2030 also aims to attract foreign investment and to develop infrastructure such as data centres, which are themselves vulnerable to attack. Such ambitions would be jeopardised if the kingdom endured a persistent threat from drones launched across its southern border by the Houthis or from ballistic missiles fired directly by Iran. In September 2019 Saudi Arabia suffered a stark reminder of that vulnerability. With Iranian‑Saudi relations at a middling point, the country awoke to discover that an Iraqi‑based Iranian proxy militia had dispatched a swarm of drones at two of its most vital oil facilities—Abqaiq and Khurais. Although initial speculation pointed to Houthi involvement, a subsequent site visit revealed impact holes on the northern faces of the structures, confirming the origin. The strike halted roughly half of Saudi oil exports for several days, delivering a wake‑up call about the fragility of critical national infrastructure. More recent satellite imagery showed the Abqaiq installation struck again by drones launched from Iraqi Iranian proxies. Oil remains the lifeblood of the Saudi economy. In response to the U.S. and Israeli strikes of February, Iran effectively shut down the Strait of Hormuz, the conduit through which roughly twenty percent of the world’s oil and liquefied natural gas travels. To mitigate the disruption, Saudi Arabia pumped as much crude as it could—about five million barrels per day—along its east‑west pipeline to the Red Sea export terminal at Yanbu. From there the oil was loaded onto tankers that headed south into the Arabian Sea and onward to Asian markets. So far the arrangement has held. On 13 July, however, Saudi forces bombed Sanaa airport just outside the Yemeni capital. The operation was claimed by Yemen’s Saudi‑backed government, which said it intended to block an Iranian aircraft from landing. In retaliation, the Houthis struck Saudi airports at Abha and Jizan. Further concern for Riyadh stems from Houthi attacks on Saudi shipping in the Red Sea, rendering passage through the constricted Bab El Mandeb strait highly perilous. This, in turn, impedes the kingdom’s oil exports to Asia. Saudi Arabia invested seven years in an effort to militarily subdue the Houthis, a campaign that failed and contributed to one of the worst humanitarian crises of the era; its repercussions persist. An uneasy truce was reached with the Houthis in 2022, accompanied by reports of financial payoffs, yet the kingdom—still the wealthiest state in the