Ten days after a precision attack on the Saudi state-owned oil giant Aramco in the northeast of the country, repairs are lagging, exports to key Asian markets are in question and the Gulf monarchy may be waking up to a new geopolitical reality.

The arena for de-escalation, experts say, would be Yemen, where Saudi Arabia and its regional rival Iran support opposing sides in a years-long conflict.

Saudi Aramco last week notified Japan’s biggest oil distributor – JXTG Nippon Oil & Energy – that it would be downgrading its oil exports to Tokyo from light grade to “heavy and medium” starting in October, the Nikkei Asian Review reported.

Japan relied on Saudi Arabia for almost 40% of its oil in 2018, according to the outlet.

The Aramco communique is an indication that full repairs to Abqaiq, the world’s largest oil processing facility, will not be completed as promised by the end of September as promised, but have no specified completion date.

The cost of custom spare parts and the urgent nature of the demand could cost Saudi Aramco hundreds of millions of dollars, according to a report in the Wall Street Journal.

“We are now alone and we must manage accordingly. Yesterday’s allies are no longer the same as they were … their claims to stand with us in times of crisis has been exposed,” read an op-ed in the Saudi government-aligned daily Okaz.

The critique likely refers not only to the administration of US President Donald Trump – who declined to attack Iran in response – but also to the allied United Arab Emirates, which has recently sought to engage with Iran and distance itself from the Saudi-led intervention in Yemen.

Even China, a key importer of Saudi oil, has declined to get involved, the Okaz op-ed opined. “So who is left? The truth is no one will decisively intervene to stop Iran,” he wrote.

Olive branches

On Wednesday, Iranian President Hassan Rouhani will propose a new Gulf security coalition to his Arab neighbors in an address at the UN General Assembly in New York.

While it is unlikely Saudi Arabia will react positively to such an offer after the September 13 attack on its oil facilities – assessed by the US, UK and European capitals to have been carried out by Iran – the kingdom appears to be seeking a de-escalation with its regional rival.

On Sunday, a delegation from the Yemeni government, which is backed by Saudi Arabia, arrived in Oman for talks with Yemen’s Iran-backed Houthi rebels.

The Houthis, for their part, last Friday announced they would cease all attacks against Saudi territory.

The offer by the rebels, who have been fighting the Saudi-led military coalition in Yemen since 2015 and who regularly lob missiles across the border, appeared to be a deliberate olive branch after claiming the Aramco attacks.

The attacks on the northeastern facilities are believed to have originated from the north – just across the Gulf waters in Iran – rather than the southern extreme of the Arabian peninsula in Yemen.

The Iranians are thought to have taken advantage of the US-supplied Patriot batteries being pointed to the south, and not the north, leaving incoming drones and missiles out of its 120-degree view until the last minute.

“Orientated towards the west-southwest, this battery should be able to intercept any ballistic missiles coming from Yemen. However, it is poorly sited to cope with threats from the north, the direction that the Saudi military says the UAVs that attacked Abqaiq came from,” said research firm IHS Markit.

The threat of a direct attack from Iran appears to have been largely discounted until now, despite the steady summer-long ratcheting up of tensions in the Persian Gulf.

Room for diplomacy

The participation by the Yemeni government in fresh peace talks appears to be a calculated move aimed at not only engaging with Iran’s allies, but also at restoring the Saudi camp to relevance. Over the summer, southern separatist forces backed by the UAE seized control of Aden from the Saudi-backed government.

“It is in the interest of Saudi Arabia to de-escalate with Iran,” said Nabeel Nowairah of the DC-based Gulf International Forum. Any retaliation to their Aramco attack “will face a larger response,” he added.

Saudi Crown Prince Mohammed bin Salman has made an IPO of Aramco a cornerstone of his strategy to shift the economy from oil to new sectors and technologies. Any fresh attack on the oil giant, whose production was halved in the immediate aftermath of the attack, could dissuade investors.

Saudi authorities also realize that Trump, who touted the energy independence of the United States in the wake of the Aramco attacks, is not prepared to go on the offense for his Gulf ally.

“I think Saudi Arabia realizes that the United States is not willing to go to war with Iran,” said Nowairah. The Iranians, on the other hand, have demonstrated the political will to use force, he added.

Tehran is meanwhile looking to widen cleavages between Gulf states. The fact that the attacks were against Saudi Arabia was a calculated message to neighboring states that they had been spared, said Washington-based analyst Sigurd Neubauer.

When it comes to the latest attempt at talks in Oman, “what’s clear is Iran has firmly interjected itself in all these dynamics, so now anything with the Yemen peace process will be tied with Iran – if not a veto, it will dominate the political and diplomatic process,” he told Asia Times.

Speaking on the sidelines of the UN General Assembly on Monday, a senior Gulf official told the Emirati daily The National there is “room for diplomacy” with Iran.

A distinct risk of escalation, however, persists, according to Samaa al-Hamdani of the Middle East Institute.

The Saudi-led coalition targeted Houthi-held areas in Yemen in the wake of the Aramco attacks, the US has sent new troops to the Arabian Peninsula and Iran has called on Western powers to leave the Gulf, she noted.

“If no direct action or a political gesture is made to de-escalate, we will continue to see an escalation between Saudi and Iran,” Hamdani said.