US blames Iran for drone strikes on Saudi oil facilities
The US blamed Iran today for drone strikes on two Saudi oil facilities on Saturday that knocked out about half the kingdom’s oil output.
US secretary of state Mike Pompeo today accused Iran of “an unprecedented attack on the world’s energy supply.”
Iran hit back, dismissing the claim that it was responsible and warning that it was ready for war.
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“Everybody should know that all American bases and their aircraft carriers in a distance of up to 2,000 kilometers around Iran are within the range of our missiles,” the head of the Revolutionary Guards Corps Aerospace Force Amirali Hajizadeh was quoted as saying by Tasnim news agency.
Yemen’s Iran-aligned Houthi group claimed responsibility for the attacks, but Pompeo said there was no evidence the attacks came from Yemen.
“Tehran is behind nearly 100 attacks on Saudi Arabia while Rouhani [President Hassan Rouhani] and Zarif [foreign minister Javad Zarif] pretend to engage in diplomacy. Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply. There is no evidence the attacks came from Yemen,” Pompeo said.
UK foreign secretary Dominic Raab said he had spoken to Pompeo and added: “This was a reckless attempt to damage regional security and disrupt global oil supplies. The UK condemns such behaviour unreservedly.”
The Saudis lead a western-backed military force supporting Yemen’s government against the Houthi rebels.
State-owned oil company Saudi Aramco said the attack on two of its facilities would cut output by 5.7m barrels a day, equivalent to five per cent of global output.
Aramco, which is planning a stock market listing, gave no update for when output would resume, but said this morning that it would give a progress update in around 48 hours.
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The Saudi stock market was down nearly one per cent today, having earlier fallen by as much as three per cent.
On Friday the closing price of a barrel of Brent Crude was $60.25, analysts expect the price to spike when the oil markets open tomorrow.
Sam Wahab, head of oil and gas at SP Angel, said: “I wouldn’t be surprised to see the oil price go over $70 in the next week. The action taken has been that severe in terms of global supply and demand.
“It is going to have a very big near term impact, Saudi has 10 per cent of global oil production.”
Gary Ross of Black Gold Investors said: “The heart of the Saudi oil industry has been successfully attacked so look for prices to rise substantially to $65-$70 per barrel.”
Analysts also said the attacks could damage the prospects for Aramco’s proposed mammoth float that could value the business at up to $2 trillion.
Ayham Kamel of Eurasia Group said: “The attacks could complicate Aramco’s IPO [initial public offering] plans given rising security risks and potential impact on its valuation.”
Wahab said: “Aramco’s IPO for the moment is now put on hold for a long time.”