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Oil Prices Spike As U.S. Accuses Iran Of Attack On Saudi Oil Fields


The Topline: The United States has released images to back its claim that Iran was behind the attack on key Saudi oil facilities over the weekend, not the Houthi rebels in Yemen who claimed the strikes. Oil prices soared after the attacks halved output from the world’s second largest oil producing country. 

  • At least 17 strikes hit two Aramco oil production facilities in Abqaiq and Khurais in eastern Saudi Arabia Saturday. The attack caused large fires at the factories, but no deaths have been reported.
  • Houthi rebels based in Yemen claimed responsibility for the attack, but unnamed U.S. officials told international media that Iran is a more likely suspect. 
  • Trump administration officials told the The New York Times the satellite imagery of the damaged plants shows that the point of impact for the strikes appears to have come from the north or northwest. That would be consistent with an attack from Iran or Iraq, not Yemen, which lies to Saudi Arabia’s south. Some photos appeared to show damage on the western side of the facilities as well. 
  • A combination of drones and cruise missiles had been used and Houthi rebels acting alone would not have been capable of staging such a precise attack, according to the White House officials.
  • Secretary of State Mike Pompeo directly accused Iran. “Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply,” Pompeo wrote on Twitter. “Tehran is behind nearly 100 attacks on Saudi Arabia while [President Hassan] Rouhani and [foreign minister Javad] Zarif pretend to engage in diplomacy.” 
  • Iran has denied its involvement. Abbas Mousavi, Iran’s foreign ministry spokesman, said “such fruitless and blind accusations and remarks are incomprehensible and meaningless.”

Crucial quote: “Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed,” President Donald Trump tweeted Sunday night.

Key background: The attacks deep inside Saudi territory threatened not only the kingdom’s core industry but also the energy markets with the strikes effectively taking 5% of global oil output offline.

  • When markets opened on Monday the price of brent crude jumped by 20% to a peak of nearly $72 per barrel before easing back to $68 a barrel. It was the biggest intraday percentage spike on record since 1990, when Saddam Hussein invaded Kuwait sparking the Gulf War.
  • President Donald Trump suggested on Sunday he could release supplies from the U.S.’s massive Strategic Petroleum Reserve. 
  • Oil prices could remain volatile while Saudi officials and Saudi Aramco race to take stock of the damage and make repairs. The incident is also likely to cast a shadow of Aramco’s planned initial public offering. 
  • The attack also marks a significant escalation of tensions in the Middle East. Saudi Arabia, and several other Gulf nations, have been fighting to oust Yemen’s Houthi movement which seized effective control of the country in 2015. Riyadh claims that Iran has been aiding the Shia militants who since 2017 have used missiles attacks to retaliate against Saudi’s campaign of air strikes. The incident follows a series of flareups between the U.S. and Iran over the summer with Washington blaming Tehran for mine attacks on two oil tankers in the Gulf of Oman in June.
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