Saudi Arabia is facing a difficult dilemma. Ever since the US and Israel launched their war on Iran on 28 February, the Saudis have largely tried to stay out of it. But now, after being attacked from three sides, the Saudis have had enough. This week, they carried out joint strikes with the US on Iranian proxy militias in Iraq who they believe have been launching drones at the Kingdom. This was reported by Qazaqyia.kz citing BBC News.

For Saudi Arabia the dilemma now is whether to keep on hitting back as a deterrent, or whether to try to de-escalate the situation, perhaps by paying off some of their adversaries. First, a bit of context. There are broadly two sides in the conflict: on one side, Iran and its Islamic Revolutionary Guards Corps (IRGC), allied with the Houthis in Yemen, the Popular Mobilisation Forces in Iraq, and Hezbollah in Lebanon. On the other side, the US with its Central Command (Centcom), plus Gulf Arab states and Jordan. Israel remains a close US ally but is not an active participant.

Iran has recently concentrated drone and missile attacks on Jordan, Kuwait and Bahrain, as well as targeting commercial shipping in the Strait of Hormuz. The addition of Iraqi militias and the Houthis is a new phenomenon, showing that without a lasting peace deal, the region risks becoming embroiled in a widening conflict.

There are several reasons why Saudi Arabia is trying to avoid a full-scale conflict. Its de facto ruler, Crown Prince Mohammed Bin Salman, has embarked on "Vision 2030" to diversify the economy away from oil, attract foreign investment, and build vulnerable infrastructure like data centres. This will not work if the Kingdom faces a long-term threat from Houthi drones or Iranian ballistic missiles.

In September 2019, the Saudis suffered a shock. With relations with Iran poor, they found that an Iranian proxy militia in Iraq had launched drones at two vital oil facilities at Abqaiq and Khurais. At the time, some suggested the attack came from the Houthis, but I visited the site and saw holes in the superstructures facing north. That attack knocked half of Saudi oil exports offline for several days and was a wake-up call. On Monday, satellite images showed the Abqaiq facility was struck again by drones from Iraqi proxy militias.

Oil remains the lifeblood of the Saudi economy. Iran retaliated against US and Israeli attacks in February by effectively closing the Strait of Hormuz, through which 20% of the world's oil and LNG travels. The Saudis pumped about 5 million barrels per day through their east-west pipeline to Yanbu on the Red Sea, then to Asia. But on 13 July, the Saudis bombed Sanaa airport near the Yemeni capital. In retaliation, the Houthis attacked Saudi airports at Abha and Jizan. More worryingly, the Houthis have begun attacking Saudi shipping in the Red Sea, making the Bab El Mandeb strait dangerous and choking off oil exports to Asia. Saudi Arabia spent seven years trying to bomb the Houthis into submission and failed.