IRANIAN REACTIONS TO SAUDI OIL PROJECT

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP86T01017R000202270001-7
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 22, 2016
• Document Release Date: January 7, 2011
• Sequence Number: 1
• Publication Date: April 25, 1986
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/01/07: CIA-RDP86T01017R000202270001-7 r
SUBJECT: Iranian Reactions to Saudi Oil Project
Distribution:
Orig - Morton Abramowitz, State
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(25Apr86)
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Central Intelligence Agency
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Washington, D. C.20505
DIRECTORATE OF INTELLIGENCE
25 April 1986
Iranian Reactions to Saudi Oil Policy
Summary
Iran views Saudi Arabia's current oil policies as a threat
to the Iranian economy, its war effort, and potentially, the
stability of the regime. Tehran hopes to persuade Riyadh to
change its stance but appears prepared to use force if
political pressure fails and if Tehran were faced with
prolonged economic decline coupled with internal unrest.
More forceful Iranian actions probably would consist
initially of terrorism, sabotage, or assassinations--measures
that would preserve a degree of plausible denial for Tehran.
It may opt for a small-scale commando raid against Saudi
facilities or launch a single surface-to-surface missile,
hoping to frighten Riyadh into modifying its position. Fear
of provoking Western intervention is likely to continue to
deter Iran from using its own forces in a major attack on
Saudi or Kuwaiti oil facilities. Only a major attack on
critical Saudi oil systems could inflict sufficient damage to
keep Gulf oil flows below pre-attack levels for an extended
period and bring a sharp increase in prices and serious
shortages in OECD countries.
This paper was prepared by
Analysis, Persian Gulf Division, and
Office of Global Issues. Comments and queries are
welcome and may be directed to the Chief, Persian Gulf Division
NESA M 86-20059
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Iranian leaders realize that a prolonged period of low oil prices will
sharply increase popular disaffection with the regime, squeeze funding for
the war, and might produce enough unrest to force them to reconsider the
way they are prosecuting the conflict. Low oil prices will force the
regime to make much deeper cuts in consumer and industrial imports this
year--the regime already had to slash imports by one third in 1985.
While the Iranians almost certainly recognize that soft market
conditions are playing a major role in driving oil prices down, they also
apparently believe that the Saudis have increased production largely in an
effort to squeeze Iran. Iran has tried since r r the
Saudis to change their oil policy and has warned
Riyadh that continued intransigence would risk Iranian military
retaliation.
If Iran is not able to secure Saudi cooperation to shore up oil prices,
and if low oil prices threaten its ability to prosecute the war with Iraq,
we believe Iran is prepared to make good on its threats to use
force--although we have no evidence that Tehran has a timetable. Instead,
Tehran would likely initiate a gradually escalating campaign of force to
intimidate the Saudis, starting with indirect actions. A probable first
step would be to step up attacks on--or start seizing--Saudi and Kuwaiti
tankers. Iranian aircraft recently hit a Saudi tanker for the first time
in two years. If this tactic fails to influence the Saudis, we expect
Tehran to increase the pressure, possibly by sponsoring terrorism against
Gulf state oil facilities or the assassination of low to mid-level Saudi or
Kuwaiti officials. Iran might also attempt to disrupt the annual
pilgrimage to Mecca this August. We continue to doubt the Iranians would
conduct a major attack on Saudi or Kuwaiti oil facilities for fear of
provoking Western intervention.
Other possible Iranian tactics include small-scale raids or sabotage
operations directly by Iranian commandos against Saudi, Kuwaiti or Bahraini
oil facilities. Among the most accessible targets for such operations are
Kuwait's Mina al Ahmadi onshore crude export terminal and offshore sea
island; the Ras al Khafji and Mina Saud export terminals, which handle oil
from the Neutral Zone that is marketed on Iraq's behalf; and the UAE's
offshore processing and export installations on Das, Fateh, and Zirku
islands and its onshore facility at Jabal az Zannah. Iran might also
calculate that the deployment of Scud or Frog missiles within range of oil
facilities or the launch of one missile and the threat of further attacks
would frighten the Saudis into changing their policy.
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Military Capabilities and Training
The Iranians appear to have stepped up their efforts to train forces
for commando and sabotage operations since the beginning of the year.
The coastal oil facilities of Saudi Arabia and the other Persian Gulf
states are all within the 300 kilometer range of Scud missiles fired from
the Iranian mainland. Because of the Scud's poor accuracy and small
warhead, however, the Iranians would have to fire many rockets at such
targets to increase their chances of hitting vital equipment. Frog
missiles launched from southwestern Iran have the range to hit some oil
Vulnerability of Oil Installations
An attack such as a commando raid or the launch of one or two Scud
missiles probably would not curtail Gulf oil supplies for any significant
period of time. Damage from such an operation would be limited and surplus
capacity would be available to offset any loss. The impact on the
psychology of the oil market, however, could bring the current price slide
to an abru t halt by creating new uncertainties about future oil supplies.
To cause significant, longterm disruption, Tehran would have to use
virtually all of its air, naval, and terrorist resources to blockade or
mine the Strait or systematically destroy critical oil installations
throughout the Gulf. If Iran succeeded in inflicting damage to critical
oil systems--particularly in Saudi Arabia--we believe Gulf oil flows might
not return to pre-attack levels for up to six months. With most surplus
capacity now in the Gulf, loss of a significant portion of production for
six months or so would lead to a sharp run-up in world oil prices and
serious oil shortages in OECD countries.
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Sanitized Copy Approved for Release 2011/01/07: CIA-RDP86T01017R000202270001-7
 Sanitized Copy Approved for Release 2011/01/07: CIA-RDP86T01017R000202270001-7
Sanitized Copy Approved for Release 2011/01/07: CIA-RDP86T01017R000202270001-7