Saudi Arabia: Aramco Investments in Resilience Keep Oil Flowing Despite Crisis

What happened: As Iran has stepped up strikes on its Gulf neighbors, its missiles and drones have been mostly ineffective against Saudi Arabia’s defenses, delivering negligible damage to energy infrastructure.

Why it matters: This affirms the wisdom of government and Saudi Aramco investments in aerial defense capabilities since the 2019 Abqaiq-Khurais attack. These defenses are critical to Aramco’s ability to reliably meet its contractual obligations to its offtakers.

What happens next: Aramco will continue expanding its security investments in coordination with the Defense Ministry, including increasing anti-drone capacity. Defense technology and service providers, especially those focused on emerging threats, should consider Aramco a potential customer.

Over the past three weeks, Iranian attacks and the Strait of Hormuz blockade have upended the Saudi government’s plans on numerous fronts, disrupting oil sales and scrambling Vision 2030 goals. Escalating attacks on energy infrastructure this week have ratcheted up the dangers, threatening Saudi Aramco’s ability to use primary infrastructure whenever the Strait is eventually unblocked.

Aramco’s success, operationally and reputationally, is driven by its ability to deliver oil and other products reliably and efficiently. This imperative is what led the company to decide, during the 1980s Iran-Iraq War, to build the 1,200km East-West Pipeline from its eastern oilfields to the Red Sea port of Yanbu, in case the conflict prevented exports via Hormuz. Aramco further expanded the pipeline’s capacity in 1992, following the Gulf War.

A Hormuz bypass wasn’t needed for decades, leaving the pipeline operating well below capacity to supply western refineries. But this month, in tandem with a repurposed natural gas liquids pipeline, it has ramped up to carrying a full 7mn bpd of oil to Yanbu for loading — providing Aramco with a critical lifeline for oil exports.

No Stranger to Crisis

It is actually a disaster that befell Aramco over the last decade that has spurred the most dramatic efforts to harden the energy sector’s defenses. The Houthis’ 2019 missile and drone attack on Aramco’s Abqaiq and Khurais oil processing facilities knocked out 5% of global oil supply, but Aramco addressed the extensive damage within 11 days through innovative repair techniques and extensive capital investment.

That disaster had three broad impacts.

1. It led Saudi leaders to question the willingness of the US, its principal ally, to provide the Kingdom’s preferred level of protection. This encouraged authorities in Riyadh to seek greater self-reliance in defending critical infrastructure against external threats.
2. The 2019 attack demonstrated to Aramco’s leadership — including CEO Amin Nasser (see Featured Personality) — that security is not merely a facilities issue but, in fact, a core business imperative essential to the company’s and the Kingdom’s economic stability. Even before the current war, Aramco has had to adapt to a rolling series of physical or cyber attacks from the Houthis, Iraqi militias, organized crime and state-sponsored actors.
3. It prompted the Defense Ministry to prioritize air defense capacity in its procurements, acquiring US- and South Korean-made missile and drone interceptor systems.

Consequently, on 2 March, when Iranian drones targeted Ras Tanura — the Kingdom’s largest refinery and a critical export hub — Saudi forces successfully intercepted the drones, resulting in only minor fire damage and a two-week halt in operations. Further Iranian aerial attacks on 18 March targeted the SAMREF refinery at Yanbu and other Aramco facilities in Riyadh, again reportedly yielding only minor damage.

Pairing Sovereign and Private Capabilities

The Saudi response to recent Iranian attacks highlights the value of a dual approach in which the Defense Ministry and Aramco make complementary investments in defense capabilities.

In the past two years, Aramco has rolled out integrated surveillance, networked sensor arrays and real-time threat response systems across its infrastructure, while the Defense Ministry has upgraded national defenses, deploying US THAAD anti-ballistic missile systems and South Korean M-SAM-II systems in an air defense architecture designed to counter drone and missile attacks.

Reports this month indicate that Aramco is in talks with Ukrainian companies to purchase anti-drone interceptors and jamming technology. While it may seem an unusual step for an NOC, this is the new normal in the Gulf, where producers must do what is necessary to protect corporate assets and personnel.

Such low-cost anti-drone defenses would allow Aramco to prioritize targets independently of the Defense Ministry, minimizing command-and-control timelines when approving kinetic actions. They would also reduce Aramco’s reliance on the Saudi government’s inventory of Patriot PAC-3 MSE systems, which cost roughly $4mn per interceptor and risk depleting stocks against low-value targets.

Conversely, an Aramco investment in low-cost interceptor drones and electronic jamming would drop the cost to approximately $2,500 per unit. This reduction would transform the conflict into a manageable operational hazard, allowing the Saudi government to reserve top-tier missiles for ballistic threats without sacrificing stable, dependable oil production.

Building on Successful Defense

Looking ahead, we expect Aramco to close multiple deals to expand its own aerial defensive capabilities, reinforcing its resilience while complementing the Defense Ministry’s. These investments will be justified by the need to maintain energy flows to meet Aramco’s contractual obligations. Cyber defenses are another area where we expect the company to continue expanding investment, again in close coordination with national defense authorities.

Service companies that provide technologies and services that counter physical and cyber threats, including those traditionally sold to governments, should consider Aramco a potential customer. There may also be opportunities to partner with Aramco in developing new custom products in tandem with the company’s security team.

As regional threats to its infrastructure and personnel grow, Aramco will continue to take measures to protect its assets — and, with them, the Kingdom’s energy security and reputation as a reliable, world-leading energy exporter.