Saudis race to restore oil output
Pompeo of US blames drone attacks on the Iranians
Saudi Arabia raced on Sunday to restart operations at oil plants hit by drone attacks, which halved production, as Iran denied US claims it was behind the assault.
Tehran-backed Huthi rebels in neighbouring Yemen, where a Saudi-led coalition is bogged down in a five-year war, claimed credit for Saturday’s strikes on two plants owned by state giant Aramco.
But US secretary of state Mike Pompeo pointed a finger at Tehran, saying there was no evidence that the “unprecedented attack on the world’s energy supply” had been launched from Yemen.
“The US will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression,” the top US diplomat added.
That drew an angry response from Tehran, where foreign ministry spokesperson Abbas Mousavi said: “Such fruitless and blind accusations and remarks are incomprehensible and meaningless.”
The remarks are designed to harm Iran’s reputation and provide a pretext for “future actions” against the Islamic republic, he said. Saudi de facto ruler Crown Prince Mohammed bin Salman, whose nation has struggled with Iran for decades for regional dominance, said the kingdom is “willing and able” to respond to this “terrorist aggression”.
But a tit-for-tat strike on Iranian oilfields is “highly unlikely”, said Middle East expert James Dorsey.
“The Saudis do not want an open conflict with Iran. The Saudis would like others to fight that war, and the others are reluctant,” said Dorsey of the S Rajaratnam School of International Studies in Singapore.
Instead, the kingdom focused its efforts on restoring production at the plants.
The Saudi bourse slumped 3% as the week’s trading began on Sunday morning.
Saturday’s explosions set off fires that engulfed the Abqaiq plant, which is the world’s largest oil-processing facility, and nearby Khurais, the site of a large oilfield.
Saudi’s energy infrastructure has been hit by the Huthis many times before, but this strike is of a different order, abruptly halting output of 5.7-million barrels per day (bpd), or about 6% of the world’s oil supply.
The full extent of the damage was not clear, nor was the type of weapon used, and reporters were kept away from the plants amid beefed-up security.
Saudi interior ministry spokesperson Mansour al-Turki said that there were no casualties in the attacks.
Aramco has said that it will dip into its stocks to offset the disruption, but the incident could batter investor confidence as its stock market debut looms.
The government hopes to raise up to $100bn based on a $2-trillion valuation of the company in what would be the world’s largest initial public offering (IPO), but the listing has been delayed repeatedly, partly because of low oil prices.
As markets keep a close watch on Saudi Arabia’s efforts to get its industry back on track, Aramco CEO Amin Nasser said on Saturday that “work is under way” to restore full production.
And newly appointed energy minister Prince Abdulaziz bin Salman said part of the drop would be offset by drawing on vast storage facilities designed to be tapped during times of crisis. Riyadh, which is the world’s top crude exporter, has built five giant underground storage facilities across the country, and they can hold tens of millions of barrels of various refined petroleum products.
After a phone call between US President Donald Trump and Prince Mohammed, the White House condemned the attacks on “infrastructure vital to the global economy”. Tehran and Washington have been at loggerheads since May 2018, when Trump pulled the US out of a 2015 deal that promised Iran relief from sanctions in return for curbs on its nuclear programme.
Washington’s response throws into doubt the reported efforts by the US president to arrange a meeting with Iranian President Hassan Rouhani at the coming UN assembly. The UN’s Yemen envoy, Martin Griffiths, said that he is “extremely concerned” about the latest attacks.
The attacks also drew swift condemnation from Riyadh’s Gulf allies, the United Arab Emirates, Bahrain and Kuwait.
Saudi Arabia has spent billions on military hardware, but recent events have underscored its infrastructure’s vulnerability to attack. While the kingdom’s oil wells, which are scattered over a vast area, may be difficult to hit, its oil-processing facilities are much more exposed.
In recent months, the Huthis forces have staged repeated cross-border missile and drone attacks targeting Saudi airbases and other facilities in what they have depicted as retaliation for the Riyadh-led bombing campaign on rebel-held areas in Yemen.
THE SAUDIS DO NOT WANT A CONFLICT WITH IRAN. THEY WOULD LIKE OTHERS TO FIGHT THAT WAR, AND THE OTHERS ARE RELUCTANT