Saudi oil attacks: U.S. intelligence 'shows Iran involved'

Elias Hubbard
September 16, 2019

Saturday's attack made no immediate impact on global oil prices since as markets were closed for the weekend, yet some analysts have cautioned that oil prices could spike when markets reopen on Monday.

"It has incredible built-in redundancies in its oil infrastructure and stored oil to compensate for any outages", said Wald, who is president of Transversal Consulting and author of "Saudi Inc." about Aramco.

Yemen's Iran-aligned Houthi group claimed responsibility for the attacks, which have cut Saudi oil output roughly in half.

The latest attacks on the Kingdom's oil facilities in the Eastern Province resulted in the halt of an estimated 5.7 million barrels of crude oil supplies, or about 50 percent of Aramco's production, Energy Minister Prince Abdulaziz Bin Salman said on Sunday. On Sept 11 Iran said the vessel had been sold at sea to a private company and denied Tehran had broken the assurances.

The conflict has been labelled a "proxy" war in which Saudi Arabia and Iran back the opposing sides.

The United States has become the world's top crude producer after years of rapid growth in supply from the shale sector, much of it pumped from fields in Texas.

US Secretary of State Mike Pompeo directly blamed Iran for the Saudi attack on Twitter without offering evidence to support his claim. Under the 2015 agreement, Iran promised to restrict its nuclear program, but after the US withdrew, Iran stopped fulfilling some of its commitments under the accord.

In response USA president Donald Trump tweeted: "Saudi Arabia oil supply was attacked". That flexibility is now in question, especially as its fellow OPEC members struggle with various production and political problems.

"The global economy can ill afford higher oil prices at a time of economic slowdown", Ole Hansen, head of commodities strategy at Saxo Bank A/S in Copenhagen, said by email. France, condemning Saturday's attack, said such actions "can only worsen regional tensions and risk of conflict".

Yes, OPEC and its allies such as Russian Federation have cut output to prevent prices from weakening because the market has been oversupplied.

Iraq denied Sunday that its territory was used for an attack on the Kingdom and US officials said a strike from there would be a violation of Iraq's sovereignty.

"I think the price will have to reflect the changed conditions, and to reflect first, that we're going to be drawing down strategic inventory, second, that we've lost the spare capacity that the system had in Saudi Arabia", Diwan said.

Mr Stockdale said it was hard to say what the effect would be, but said it didn't bode well. It had fallen almost 20 per cent since late April against a backdrop of global economic worries, partly because of trade tension.

Traders and analysts said crude may spike to as high as $100 (all prices in U.S. dollars) a barrel if Riyadh fails to quickly bring back supply.

Aramco also said it would dip into its reserves to offset the disruption.

Coalition spokesman Colonel Turki al-Malki said an investigation had been launched into who planned and executed the strikes on oil facilities.

"Whoever has attacked, whether it's Iran or Iranian-backed Houthis or whatever, they've demonstrated they have the ability to shut it down and that is a profound shock to the oil market in terms of the psychology".

Tensions between Washington and Tehran were already running high because of a long-running dispute between the two nations over Iran's nuclear program that led the United States to impose sweeping sanctions.

Before the attack, the Organization of the Petroleum Exporting Countries (OPEC) global supply cushion was just over 3.21 million barrels per day (bpd), according to the International Energy Agency (IEA). However, the president said he pulled back from retaliating against Iran at the last minute.

Other reports by Click Lancashire

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