Coordinated strikes on key Saudi Arabian oil facilities, among the world’s largest and most important energy production centers, have disrupted about half of the kingdom’s oil capacity, or 5% of the daily global oil supply.
Yemen’s Houthi rebels on Saturday took responsibility for the attacks, saying 10 drones targeted state-owned Saudi Aramco oil facilities in Abqaiq and Khurais, according to the Houthi-run Al-Masirah news agency.
Yet key questions about the attacks remain unanswered. US Secretary of State Mike Pompeo pinned the strikes directly on Iran, which backs the Houthi rebels. But he said there was “no evidence the attacks came from Yemen.”
Preliminary indications are that the attacks likely originated from Iraq, a source with knowledge of the incident said. Iran wields significant influence in southern Iraq, which is situated much closer than Yemen to the affected Saudi sites.
“Iran has now launched an unprecedented attack on the world’s energy supply,” Pompeo said in a Twitter post.
A spokesperson for Iran’s foreign ministry, Seyyed Abbas Mousavi, rejected the accusation that Tehran was behind the attacks, saying that “blind accusations and inappropriate comments in a diplomatic context are incomprehensible and meaningless.” Iraq denied that its territory was used to launch the attacks.
In a statement on Sunday, Saudi Energy Minister Prince Abdulaziz bin Salman said that 5.7 million barrels a day of crude oil and gas production have been affected. The latest OPEC figures put total Saudi production at 9.8 million barrels per day.
The energy minister said Aramco “is currently working to recover the lost quantities” of oil and will update the public within two days. “These attacks are not only aimed at the vital installations of the kingdom, but also on the global oil supply and its security, and thus pose a threat to the global economy.”
The Saudi interior ministry had confirmed that the attacks caused fires at the two facilities. In a statement posted on Twitter, the ministry said the fires were under control and that authorities were investigating.
“Abqaiq is perhaps the most critical facility in the world for oil supply. Oil prices will jump on this attack,” Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University, said in a statement.
The development comes as Saudi Aramco takes steps to go public in what could be the world’s biggest IPO. Aramco attracted huge interest with its debut international bond sale in April. It commissioned an independent audit of the kingdom’s oil reserves and has started publishing earnings. Over the past two weeks, the kingdom has replaced its energy minister and the chairman of Aramco.
Saudi Arabia, the world’s largest oil exporter, has cut back on production of crude and other energy products as part of an OPEC effort to boost prices. Saudi Arabia produces approximately 10% of the total global supply of 100 million barrels per day.
The International Energy Agency, or IEA, said on Saturday it was monitoring the situation in Saudi Arabia. “We are in contact with Saudi authorities as well as major producer and consumer nations. For now, markets are well supplied with ample commercial stocks,” it said on Twitter.
If the disruption in Saudi Arabia is prolonged, “sanctioned Iran supplies are another source of potential additional oil,” Bordoff said. “But [US President Donald] Trump has already shown he is willing to pursue a maximum pressure campaign even when oil prices spike. If anything, the risk of tit-for-tat regional escalation that pushes oil prices even higher has gone up significantly.”
US Energy Secretary Rick Perry “stands ready” to tap the country’s Strategic Petroleum Reserve to steady oil markets if necessary, a department spokesperson said in a statement. The country’s emergency oil supply — a series of storage tanks and underground caverns created after the oil crises of the 1970s — holds 630 million barrels of crude, an Energy Department official said.
Oil prices fell on Friday, with Brent crude, the global price benchmark slipping 0.3% to close at $60.22 per barrel.