CONDEMNATION AS HOUTHI DRONES HIT OIL PIPELINE IN SAUDI ARABIA
▶ Energy Minister Khalid Al Falih says no one was injured and the attacks failed to disrupt cross-kingdom supplies
Saudi Arabia said several rebel drone attacks targeted two sections of its oil infrastructure yesterday, calling it a cowardly act of terrorism.
Energy Minister Khalid Al Falih said the attacks caused a fire but no injuries or disruption to oil production at two pumping stations and pipeline between Eastern Province and Yanbu.
The sites were attacked by drones carrying explosives, the minister said, incidents that threatened global oil supplies. The attack took place between 6am and 6.30am yesterday, but caused minimal damage.
The UAE Ministry for Foreign Affairs condemned the attack, saying it was “new proof of the Houthi [rebel]’s hostile and terrorist tendencies”.
Yesterday, Houthi-run television said they had carried out a “big military operation” using drones against seven Saudi installations. They did not identify the targets and it is not clear if those attacks were the same ones mentioned by Riyadh.
Mr Al Falih said it was an “act of terrorism” on the global oil supply. No one was killed in the attacks according to Saudi Aramco, the kingdom’s national oil company.
Saudi Arabia’s production and export of crude oil will continue uninterrupted, but pumping in the targeted pipeline was stopped temporarily, he said.
The price of Brent crude rose about 0.9 per cent after the announcement to $71.13 a barrel yesterday afternoon.
Saudi Aramco, the world’s biggest exporter of oil, released a statement on the attack. In it, the company described the attack as “a sabotage incident using armed drones” that targeted two pump stations on the East-West pipeline.
The company “temporarily shut down the pipeline, and contained the fire, which caused minor damage to pump station 8”. Saudi Aramco said that no injuries or fatalities were reported.
The East-West pipeline runs from the oil refineries in the Eastern Province to the Yanbu port on the Red Sea. It was built during the Iran-Iraq war during the early 1980s, but was later converted to natural gas. In 2012, it was converted to be able to carry oil.
It is a part of a series of pipelines that provide alternative oil-moving options to using the Strait of Hormuz.
Mr Al Falih did not say who carried out the attack but said the incident showed the importance of tackling terrorism,
The drone attack on two Saudi oil pumping stations yesterday, after sabotage of four ships off Fujairah on Sunday, is not serious in itself, but it is a warning. Reported damage was only minor, but the pipeline was shut down as a precaution.
Oil prices rose about 1 per cent in response. With exports uninterrupted, and Saudi production anyway well below capacity because of adherence to the Opec+ deal to curb production, the physical impact of these two incidents is insignificant. As repeated attacks in Yemen itself have shown, pipelines can be repaired within a few days, and Saudi Aramco has extensive stocks of spare parts. The concern is more about the message being sent, and the danger that this is just the next escalation in the Arabian Gulf confrontation.
Such a mission by drones would indicate considerable
sophistication. The two pumping stations are about 200 kilometres apart, about 750 kilometres from the Yemeni border, and are not large targets. As Rand analyst Becca Wasser points out, the Houthi forces have a UAV-X drone with a range of more than 1,400 kilometres. Still, instead of going after a larger, closer and more vulnerable target, such as a refinery or oil storage tank, the choice of this pipeline is presumably meant to send a message.
Houthi media reported a drone operation against Saudi installations, but did not specifically identify the pipeline as the target. The incident in Fujairah, damaging four ships, also remains mysterious, with no claims of responsibility nor a clear account of the mode of attack. There is nothing to respond to or retaliate against.
Saudi Arabia’s oil export routes are through the Strait of Hormuz and the Red Sea. Iranian military leaders have periodically threatened to block the Strait of Hormuz to others’ oil shipments if their own exports are interrupted. Tightening US sanctions cut Iranian crude and condensate exports to less than one million barrels per day in April, from about 2.7 million bpd last June.
Fujairah is strategic as the exit point of the Adcop pipeline from Habshan. With capacity of 1.5 million bpd, it can carry 60 per cent of the UAE’s oil exports. It is also the world’s second-largest ship bunkering (refuelling) port, a major centre for oil storage, and Adnoc is building a 42 million barrel strategic underground reserve there.
Saudi Arabia’s East-West pipeline, running to Yanbu on the Red Sea, is also a core piece of its strategy for assuring supply. With a capacity of about five million barrels per day, it is being expanded to 6.5 million bpd, and the Muajjiz maritime terminal is being revamped to load three million bpd. Allowing for feedstock for four enormous refineries in the Yanbu area, the expanded Petroline can at present export about 3.6 million bpd, approximately half of current Saudi exports.
Spare production capacity in Saudi Arabia, the UAE and
Kuwait is a key part of the US’s strategy for tightening sanctions against Iran. Donald Trump is wary of being drawn into conflict by uber-hawk John Bolton, and of rising oil prices. The pinprick damage so far has not worried markets, and serious disruption to crude flows would need a much more serious and sustained campaign. So far, these incidents appear to be a warning.