Yemen’s Iran-aligned Houthi group said it attacked plants at the heart of Saudi Arabia’s oil industry knocking out more than half the Kingdom’s output a move expected to send oil prices soaring and increase tensions in the Middle East.
The attacks will cut the kingdom’s output by 5.7 million barrels per day (bpd), according to a statement from state-run oil company Saudi Aramco, more than five percent of global oil supply.
The pre-dawn strikes follow earlier cross-border attacks on Saudi oil installations and oil tankers in Gulf waters. These were the most brazen yet, temporarily crippling much of the nation’s production capacity. Saudi Arabia is the world’s biggest exporter, shipping more than seven million barrels of oil to global destinations daily and for years served as supplier of last resort to markets.
While the Houthis claimed responsibility for the attack, US Secretary of State Mike Pompeo put the blame on Iran, writing on Twitter there was “no evidence the attacks came from Yemen.”
“Amid all calls for de-escalation, Iran launched an unprecedented attack on the world’s energy supply,” Pompeo said.
Saudi de facto ruler Crown Prince Mohammed bin Salman told US President Donald Trump by telephone Riyadh had the will and capability “to confront and deal with this terrorist aggression,” according to Saudi state news agency SPA.
The United States condemned the attacks and Trump told the crown prince Washington was ready to work with the kingdom to guarantee its security, according to the White House. The US Department of Energy said it was ready to release oil from its strategic petroleum reserve if necessary. Energy Secretary Rick Perry said his department would work with the International Energy Agency, which co-ordinates energy policies of industrialised nations, if global action is needed.
Saudi Arabia, leading a Sunni Muslim coalition that intervened in Yemen in 2015 against the Houthis, blamed regional rival Shi’ite Iran for previous attacks, which Tehran denies. Riyadh accuses Iran of arming the Houthis, a charge denied by the group and Tehran.
Coalition spokesman Colonel Turki al-Malki said an investigation was launched into who planned and executed the strikes. He said the Western-backed alliance would counter threats to global energy security and economic stability.
Aramco Chief Executive Amin Nasser said there were no casualties from the attacks.
Saudi Energy Minister Prince Abdulaziz bin Salman said Aramco would have more information within 48 hours and it will draw down oil in storage to compensate for the loss. Aramco is planning what is expected to be the world’s largest initial public offering.
HEART OF OIL MARKET
“Abqaiq is perhaps the most critical facility in the world for oil supply,” said Jason Bordoff, who runs the Centre On Global Energy Policy at Columbia University and served on the US National Security Council during Barack Obama’s presidency. “The risk of tit-for-tat regional escalation pushing oil prices even higher has just gone up significantly.”
Abqaiq is south-west of Aramco’s Dhahran headquarters. The oil processing plant handles crude from the world’s largest conventional oilfield, the supergiant Ghawar, for export to terminals Ras Tanura – the world’s biggest offshore oil loading facility – and Juaymah. It also pumps westward to Red Sea export terminals.
Two sources said Ghawar was flaring gas after strikes disrupted gas processing facilities. Khurais further southwest has the country’s second largest oilfield.
“These attacks against critical infrastructure endanger civilians, are unacceptable and sooner or later will result in innocent lives being lost,” the embassy quoted Ambassador John Abizaid as saying in a Twitter post.
Andrew Murrison, British foreign affairs minister, called on the Houthis to stop threatening civilian areas and Saudi commercial infrastructure.
It is the latest in a series of Houthi missile and drone strikes on Saudi cities that were largely been intercepted, but recently hit targets, including Shaybah oilfield and oil pumping stations. Both attacks caused fires but did not disrupt production.
“This is a relatively new situation for the Saudis. For the longest time they never had any real fear their oil facilities would be struck,” Kamran Bokhari, founding director of the Washington-based Centre for Global Policy, told Reuters.
Aramco’s CEO said in a statement the situation was under control. A Reuters witness said the fire in Abqaiq appeared to have been extinguished by early evening.
Regional tensions escalated after Washington quit an international nuclear deal and extended sanctions on Iran.
The violence is complicating UN-led peace efforts to end the Yemen war. The conflict is widely seen as a proxy war between Saudi Arabia and Iran.
The coalition intervened in Yemen after the internationally recognised government was ousted from power by the Houthis, who say they are fighting a corrupt system.
The coalition launched air strikes on Yemen’s northern Saada province, a Houthi stronghold, a Reuters witness said. Houthi-run al Masirah TV said a military camp was hit.
The Houthis’ military spokesman, without evidence, said drones hit refineries at both Saudi sites, more than 1 000 km from Sanaa and pledged further assaults against Saudi Arabia.