The Saudi Stress Test

Saudi Arabia has been building its Pressure Cell for 45 years. A Pressure Cell maps where pressure is applied, absorbed and transferred, forecasts where it will move over the next 72 hours and gives leaders options before the weak point breaks.

Back in 1981, Saudi Arabia depended heavily on the Strait of Hormuz to get its oil to market, so the kingdom built the East-West Pipeline across 750 miles of desert to Yanbu on the Red Sea, giving Saudi crude another way out.

In the decades since, Riyadh has worked to reduce its dependence on oil and to prepare its people for the crises that come with a bigger, more open economy. Last summer, for example, I spent two weeks in Riyadh working with the Saudi Press Agency Academy, putting Saudi executives through tabletop drills on a food-poisoning outbreak, a financial cyberattack, electric-car fires, tourism and the Hajj.

Along the way, Saudi Arabia pushed into sports, entertainment and the arts. It created LIV Golf, struck a $200 million agreement with New York’s Metropolitan Opera and brought Kevin Hart, Bill Burr, Aziz Ansari and Pete Davidson to the Riyadh Comedy Festival. Riyadh was also set to host a Tom Brady-led flag football tournament. The war has since rolled back much of that. The Met deal collapsed, the Public Investment Fund will stop funding LIV Golf after this season, and the Brady event moved to Los Angeles.

The oil system has held up better. When traffic through Hormuz collapsed, Aramco moved crude west to Yanbu. Later, after drones launched from Iraq hit the East-West system, it sent crude back east. As a result, Saudi oil passing through Hormuz averaged 2.9 million barrels a day in the six days to September 18, up from about 700,000 barrels a day in August. Then on September 20, Aramco loaded 14 million barrels onto seven supertankers. In a matter of days, the kingdom had moved millions of barrels from one coast to the other.

Meanwhile, Riyadh worked the diplomatic side. It signed a mutual-defense pact with Pakistan and Turkey and asked Beijing to press Tehran to restrain the Houthis.

On top of that, Saudi Arabia signed a $142 billion U.S. defense package and a new defense agreement with Washington, and this summer the two governments signed a peaceful nuclear cooperation agreement.

In other words, Saudi Arabia built its options years before it needed them, while Iran spent those same years building pressure points. Most of the other players, by contrast, are improvising.

Saudi Arabia — Pressure Rising

Saudi Arabia now faces pressure from two directions: Hormuz to the east and the Houthis to the southwest, around Yemen and Bab el-Mandeb. Washington has provided intelligence and targeting support. However, President Trump has so far declined Saudi requests for direct American strikes. As a result, Riyadh is left trying to defend everything on both coasts, while the Houthis only need to get through once.

The larger contest looks much the same. Washington can sanction the banks that move Iran’s money, squeeze its oil buyers, cut airline links and strike its nuclear program. Even so, Iran can still squeeze Hormuz and threaten Red Sea shipping through the Houthis. In short, the United States has far more power, but Iran sits next to the chokepoints that matter.

United States — Pressure Rising

According to The Wall Street Journal on Saturday, a senior Treasury official has quietly traveled to foreign capitals pressing governments to cut Iranian flights and banking ties. So far, the UAE has suspended flights by Iranian airlines, and Turkey has acted against Iranian banks. The idea is to go after the ships, banks and buyers that keep Iran’s oil money moving.

Iran, however, is playing a longer game. Back in August, I wrote that Iran did not need to defeat Trump on the water. Instead, Tehran only needed the war and gas prices to keep bleeding into November. Since the war began, regular gasoline in the U.S. has risen by $1.50 per gallon.

Washington is trying to get ahead of that calendar. Treasury launched Operation Economic Outcast, which Bessent calls an economic D-Day, and the U.S. and European allies pressed Iran to account for its enriched uranium and open its nuclear sites to inspectors. At the same time, Saudi Arabia pushed more oil into the market, and U.S. and Iranian officials spent three hours talking in New York.

Even so, the politics at home look rough. At a Washington steakhouse near the Capitol Wednesday evening, a former Republican National Committee chairman told me he puts the GOP's chance of retaining control of the House at 35 percent.

The polls are no kinder. A Reuters/Ipsos poll this month put Trump’s approval at 32 percent. Only 17 percent approved of his handling of the cost of living, 34 percent supported the strikes on Iran, and when voters were asked which party they would support for Congress, Democrats led Republicans by eight points. Iran’s leaders can read those polls too, and they know the midterms are five weeks away.

Iran — Pressure Rising

Still, Iran is under heavy strain of its own. For months, Iranian crude kept reaching China despite U.S. sanctions, until Washington reinstated the blockade in July. Since then, fresh Iranian crude has not reached China via the Strait of Hormuz. Iran can still sell oil already sitting on tankers in Asia, but that stockpile has been shrinking. On top of that, the IMF estimates Iranian inflation at 70 percent this year.

Against that backdrop, Major General Mohsen Rezaei went on Al Jazeera and publicly listed Iran’s conditions: end the war, release frozen funds and lift the naval blockade. Notably, reparations were not on his list, although Tehran later insisted it had dropped nothing.

The New York meeting also caused trouble at home. IRGC-affiliated Tasnim demanded to know who authorized Foreign Minister Abbas Araghchi’s meeting, and Rezaei then said he, President Masoud Pezeshkian and Araghchi had agreed to convey Iran’s conditions in New York.

Either way, if reparations really are off the table, that is the most important change in Iran’s position so far.

China — Pressure Building

The war is now showing up in China’s energy costs. Chinese producer prices rose 3.8 percent in August, and the prices Chinese manufacturers paid for fuel and power jumped 9.8 percent.

Although China gets discounted crude from Iran, it gets far more energy from Saudi Arabia and the Gulf, and those barrels also have to get through.

That puts Beijing in the middle. Trump pressed Xi on Iran, and U.S. Ambassador to Beijing David Perdue said Trump warned Xi not to help Iran, directly or indirectly. In response, Beijing told Washington it would not help Iran.

Tehran, however, told a different story. An Iranian official told Reuters that Chinese officials had assured Iran they would not curtail economic, political or military ties under American pressure.

Ultimately, the shipping data will show which version is true. If Chinese refiners resume buying Iranian crude and Chinese banks keep moving the money, Iran can still sell oil and get paid.

At the talks in New York, U.S. and Iranian officials discussed the terms for reopening the Strait of Hormuz. For now, traffic is a fraction of normal: only 17 commodity vessels crossed Hormuz over the September 19-20 weekend, compared with about 125 a day before the war. If ship counts and insurance rates start moving back toward normal, the talks are working.

Beijing may also matter on the Houthis. If Houthi attacks decline after Riyadh turned to Beijing, China may have done what Washington and Riyadh could not: get Iran to restrain the Houthis.

In the end, Saudi Arabia spent 45 years building a way around Hormuz, and drones launched from Iraq still found it. Likewise, Iran made China its economic lifeline, and now Washington is leaning on Beijing. Pressure keeps moving to whatever route is still open, and the ship counts over the next few weeks will show where it goes next.

Mark Pfeifle, a member of the TIPP Insights Editorial Board, served as deputy national security adviser for strategic communications and global outreach at the White House from 2007 to 2009. He runs the crisis management firm Off the Record Strategies.