Saudi Arabia's Strategic Dilemma Amid US-Iran Conflict

New Delhi, India Jul 30, 2026 ALN: 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. The conflict has escalated tensions in an already volatile region, and Saudi Arabia, which shares a long border with Yemen and has a contentious relationship with Iran, finds itself in a precarious position.

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 military action marks a significant shift in Saudi Arabia's approach to the ongoing conflict, as it attempts to assert its own security and retaliate against perceived threats.

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. This choice is complicated by the geopolitical landscape, where alliances are fluid, and the repercussions of military actions can lead to unintended consequences.

So who is attacking who and why? Understanding the players involved is crucial to grasping the implications of this conflict.

First, a bit of context. There are broadly two sides in the conflict that has been consuming the Gulf and other parts of the Middle East for five months now. On one side, there is Iran and its Islamic Revolutionary Guards Corps (IRGC). The IRGC has been instrumental in Iran's regional strategy, supporting various militias and proxy groups across the Middle East. Allied to them are the Houthis in Yemen, a tribal group who took over much of the country in 2014, leading to a protracted civil war that has devastated the nation.

Also backed by Iran are the Popular Mobilisation Forces in Iraq, the paramilitary group that has allegedly carried out 30 drone strikes on Saudi Arabia and has now been attacked in return. These militias operate with a degree of autonomy but are often coordinated by the IRGC, creating a network of Iranian influence that stretches across the region.

Then there is Hezbollah in Lebanon, still a potent force but one that is currently lying low. Hezbollah's involvement in the conflict has been less pronounced in recent months, but its historical ties to Iran and its military capabilities mean it remains a significant player in any broader confrontation involving Iran.

On the opposite side of this conflict is the US with its immensely powerful Central Command (Centcom) forces plus - to varying degrees - the Gulf Arab states and Jordan. The United States has been a longstanding ally of Saudi Arabia, providing military support and arms sales that have bolstered the Kingdom's defenses. Israel remains a close US ally but is currently not an active participant in this war, focusing instead on its own security concerns amid regional instability.

Iran has most recently been concentrating its drone and missile attacks on Jordan, Kuwait, and Bahrain, as well as targeting any commercial shipping that tries to slip through the Strait of Hormuz while avoiding Iran's new rules and routing. This aggressive posture underscores Iran's determination to assert its influence and retaliate against perceived threats, particularly from US allies in the region.

The addition of Iraqi militias and the Houthis in Yemen is a relatively new phenomenon and it shows how - without a lasting peace deal between the US and Iran - the region risks becoming ever more embroiled in a widening conflict. The interconnectedness of these groups means that a single spark could ignite a broader regional conflict, drawing in various actors and exacerbating existing tensions.

There are a number of reasons why Saudi Arabia is trying not to get sucked into a full-scale conflict. Its de facto ruler, the relatively young Crown Prince Mohammed Bin Salman, has embarked the country on a course known as "Vision 2030." This ambitious initiative aims to diversify the Kingdom away from its dependence on oil revenues and create vibrant, modern, domestic industries that will provide meaningful jobs for the hundreds of thousands of graduates and school leavers pouring onto the job market each year.

Part of Vision 2030 involves attracting foreign investment. The Kingdom has sought to present itself as a stable and secure environment for investors, which is undermined by ongoing military conflicts and instability. Part of it also involves building things like data centers that are vulnerable to attack. The potential for drone strikes and missile attacks poses a significant threat to these investments, making it imperative for Saudi Arabia to address its security concerns effectively.

This is not going to work if Saudi Arabia finds itself under an enduring, long-term threat from drones fired across its southern border by the Houthis in Yemen or ballistic missiles fired directly by Iran. The ongoing conflict in Yemen has already had devastating consequences, and the prospect of a drawn-out confrontation with Iran would further complicate Saudi Arabia's efforts to achieve its economic goals.

Back in September 2019, the Saudis suffered an unpleasant shock. With relations with Iran in a poor state, the Saudis woke up to find that an Iranian proxy militia in Iraq had launched a fleet of drones at two of its most vital oil facilities, at Abqaiq and Khurais. This attack demonstrated the vulnerability of Saudi Arabia's critical infrastructure and raised alarms about the effectiveness of its defenses.

At the time, there was a suggestion that the attack had come from the Houthis in Yemen, but I visited the site straight afterward and I could clearly see the holes in the superstructures all facing northwards. That attack knocked half of Saudi oil exports offline for several days and it was a wake-up call to Riyadh as to just how vulnerable its critical national infrastructure is to attack. The repercussions of that incident are still felt today, as it forced Saudi Arabia to reassess its military strategy and invest heavily in missile defense systems.

On Monday, satellite images showed the Abqaiq oil facility was struck by drones launched once again by Iranian proxy militias in Iraq. This escalation highlights the ongoing threat posed by these militias and the challenges Saudi Arabia faces in maintaining its security. The Kingdom's reliance on oil exports means that any disruption to its production capabilities can have significant economic repercussions, both domestically and globally.

Then there is oil, still the lifeblood of the Saudi economy. Iran retaliated against US and Israeli attacks in February by effectively closing off the Strait of Hormuz, a critical shipping channel between Iran and the Gulf through which 20% of the 's oil and liquefied natural gas traveled. The potential for conflict in this vital waterway raises the stakes for Saudi Arabia and its allies, as disruptions could lead to skyrocketing oil prices and economic instability.

In response, the Saudis pumped as much oil as they could – around five million barrels per day - through their east-west pipeline to their export terminal on the Red Sea, on their opposite coast, at Yanbu. From there, it was loaded onto tankers that headed south, out into the Arabian Sea and off to markets in Asia. This strategy has allowed Saudi Arabia to mitigate some of the immediate impacts of the conflict, but it does not address the underlying security threats posed by Iranian aggression.

So far so good. But on 13 July, the Saudis bombed Sanaa airport just outside the Yemeni capital. The strike was claimed by Yemen's Saudi-supported government, which said it wanted to prevent an Iranian plane from landing. In retaliation, the Houthis attacked regional Saudi airports at Abha and Jizan, demonstrating the escalating cycle of violence and retaliation that has characterized this conflict.

More worryingly for Riyadh, the Houthis have begun attacking Saudi shipping in the Red Sea, making it extremely dangerous for ships to pass through the narrow Bab El Mandeb strait at the southern end of the Red Sea. That in turn chokes off Saudi oil exports to Asia, further threatening the Kingdom's economic stability. The implications of these attacks extend beyond Saudi Arabia, as they could disrupt global shipping and lead to increased tensions in the region.

Saudi Arabia spent seven years trying to bomb the Houthis into submission and failed. The war that raged across Yemen was one of the worst humanitarian disasters of our time and its effects are still being felt. The conflict has resulted in widespread suffering, displacement, and a humanitarian crisis that continues to unfold. In 2022, Saudi Arabia agreed to an uneasy truce with the Houthis and there were reports of payoffs, but now the richest country in the region, Saudi Arabia, is once more facing the threat of drone and missile attacks from its southern neighbor at the same time as attacks from Iraq to the north.

None of this was envisaged in the plans for Vision 2030. The ambitious goals set forth by Crown Prince Mohammed Bin Salman are now overshadowed by the realities of regional conflict and the ongoing threat of violence. As Saudi Arabia navigates this complex landscape, the choices it makes will have far-reaching implications not only for its own future but for the stability of the entire region.

In conclusion, Saudi Arabia's strategic dilemma amid the US-Iran conflict underscores the intricate web of alliances, enmities, and geopolitical calculations that define the Middle East today. The Kingdom's efforts to balance its security needs with its economic aspirations will be critical in determining its trajectory in the coming years. As tensions continue to simmer, the potential for escalation remains high, and the international community will be closely watching how Saudi Arabia navigates these tumultuous waters.