/As much as 5 million oil bpd may be affected as Houthi drones attack Saudi oil heartland

As much as 5 million oil bpd may be affected as Houthi drones attack Saudi oil heartland


RIYADH/DUBAI/LONDON (Reuters) – Yemen’s Iran-aligned Houthi group on Saturday attacked two plants at the heart of Saudi Arabia’s oil industry, including the world’s biggest petroleum processing facility, in a strike that three sources said had disrupted output and exports.

Two sources close to the matter said 5 million barrels per day of crude production were impacted — close to half of the kingdom’s output or 5 per cent of global oil supply. Another source said some production was shut down as a precaution and that most of the lost output capacity would resume within days.

The pre-dawn drone attack on the Saudi Aramco facilities set off several fires, although the kingdom, the world’s largest oil exporter, later said these were brought under control.

State television said exports were continuing but Aramco has yet to comment since the assault, which the Houthis said was carried out by 10 drones.

“For now, markets are well supplied with ample commercial stocks,” the International Energy Agency tweeted, saying it was in contact with Saudi authorities as well as major producer and consumer nations.

The attacks occurred as Aramco accelerates plans for an initial public offering of the state oil giant to as early as this year, and follow earlier cross-border attacks on Saudi oil installations and on oil tankers in Gulf waters.

Saturday’s attacks appeared to be the most brazen yet.


Fires burn in the distance after a drone strike by Yemen’s Iran-aligned Houthi group on Saudi company Aramco’s oil processing facilities, in Buqayq, Saudi Arabia September 14, 2019 in this still image taken from a social media video obtained by REUTERS.

REUTERS

President Trump told Saudi de facto ruler Crown Prince Mohammed bin Salman by telephone that the United States was ready to work with the kingdom to guarantee its security, saying attacks on Saudi oil facilities had a negative impact on the American and global economies, state news agency SPA said.

Prince Mohammed said Riyadh had the will and capability to confront this “terrorist attack”, it said.

Saudi Arabia, leading a Sunni Muslim coalition that intervened in Yemen in 2015 against the Houthis, has blamed regional rival Shi’ite Iran for previous attacks, which Tehran denies. Riyadh accuses Iran of arming the Houthis, a charge denied by the group and Tehran.

Coalition spokesman Colonel Turki al-Malki said an investigation had been launched into who planned and executed the strikes. He said the Western-backed alliance would counter threats to global energy security and economic stability.

State television, citing its correspondent, said there were no casualties, but there was no official statement. A Reuters witness nearby said at least 15 ambulances were seen in the area and there was a heavy security presence around Abqaiq.

HEART OF OIL MARKET

“A successful attack on Abqaiq would be akin to a massive heart attack for the oil market and global economy,” said Bob McNally, who runs Rapidan Energy Group and served in the U.S. National Security Council during the second Gulf War in 2003.

Abqaiq is 60 km (37 miles) southwest of Aramco’s Dhahran headquarters. The oil processing plant handles crude from the world’s largest conventional oilfield, the supergiant Ghawar, and for export to terminals Ras Tanura – the world’s biggest offshore oil loading facility – and Juaymah. It also pumps westwards across the kingdom to Red Sea export terminals.

Two of the sources said Ghawar was flaring gas after the strikes disrupted gas processing facilities. Khurais, 190 km (118 miles) further southwest, contains the country’s second largest oilfield.

Many Western employees of Aramco live in Abqaiq. The U.S. Embassy in Riyadh said it was unaware of any injuries to Americans from the attacks.

“These attacks against critical infrastructure endanger civilians, are unacceptable, and sooner or later will result in innocent lives being lost,” the embassy quoted Ambassador John Abizaid as saying in a Twitter post.

Andrew Murrison, a British foreign affairs minister, called on the Houthis to stop threatening civilian areas and Saudi commercial infrastructure.

It was the latest in a series of Houthi missile and drone strikes on Saudi cities that had largely been intercepted, but have recently hit targets, including Shaybah oilfield last month and oil pumping stations in May. Both those attacks caused fires but did not disrupt production.

“This is a relatively new situation for the Saudis. For the longest time they have never had any real fears that their oil facilities would be struck from the air,” Kamran Bokhari, founding director of the Washington-based Center for Global Policy, told Reuters.

He said Riyadh had in the past largely protected oil assets against vehicle-borne explosive attacks by militant groups.

For the longest time they have never had any real fears that their oil facilities would be struck from the air

FLAMES, PLUMES OF SMOKE

The Reuters witness said the fire in Abqaiq appeared to have been extinguished by early evening. Earlier video footage verified by Reuters showed bright flames and thick plumes of smoke. An emergency vehicle is seen rushing toward the site.

The coalition launched air strikes on Yemen’s northern Saada province, a Houthi stronghold, on Saturday, a Reuters witness said. Houthi-run al Masirah TV said a military camp was struck.

The Houthis’ military spokesman, without providing evidence, said drones hit refineries at both Saudi sites, which are over 1,000 km (621 miles) from the Yemeni capital Sanaa, and pledged a widening of assaults on Saudi Arabia.

Regional tensions have escalated after Washington quit an international nuclear deal and extended sanctions on Iran.

United Nations envoy Martin Griffiths said the Houthi escalation was worrying and urged restraint by all parties.

The violence is complicating U.N.-led peace efforts to end the Yemen war which has killed tens of thousands and pushed millions to the brink of famine. The conflict is widely seen as a proxy war between Saudi Arabia and Iran

The coalition intervened in Yemen after the internationally recognized government was ousted from power in Sanaa by the Houthis, who say they are fighting a corrupt system.

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