Drone Strikes Impact Saudi Oil Facilities

Saudi races to restore oil supply after strike blamed on Iran

Saudi Arabia's state-owned company Aramco is the world's biggest oil producer, generating 10% of the world's oil, but it is also one of the world's most profitable businesses.

Crude oil prices have shot up 9.5% to $60 after trading opened Sunday evening in NY, a dramatic increase that comes after a weekend attack on Saudi Arabia's oil infrastructure.

U.S. President Donald Trump said he approved the release of oil from the U.S. Strategic Petroleum Reserve (SPR) if needed in a quantity to be determined due to the attack.

Trump also is apparently trying to ward off concerns by tweeting "PLENTY OF OIL!"

"Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world's energy supply", Pompeo said in a Twitter post on Saturday.

The US has blamed Iran for other attacks on oil supplies in the region this year, amid continuing tension following President Donald Trump's decision to reinstate sanctions after abandoning the landmark worldwide deal which limited Tehran's nuclear activities.

The attack over the weekend could disrupt an estimated 5.7 million barrels of oil per day, or more than 5% of the world's daily supply.

Will rising political risk help buoy crude oil prices as global demand wanes? But, you know, that may be sidelined now with these strikes, especially if the U.S.is seen as blaming Iran for these attacks in Saudi Arabia.

The conflict has been labelled a "proxy" war in which Saudi Arabia and Iran back the opposing sides. Trump, however, has been briefed by a few warring enthusiasts in Congress suggesting that any assault on Iran can be brought within the purview of the 2001 Authorization for Use of Military Force (AUMF). He implicated Iran, which is waging a proxy war in Yemen by funding the Houthi rebels in their conflict with the old regime backed by an global coalition led by the Saudis. "Even if exports resume in the next 24-48 hours, the image of invulnerability has been altered", Helima Croft, global head of commodity strategy at RBC Capital Markets, told Reuters. The Brent crude oil prices had closed on Friday, slightly higher than the $60 per barrel.

The Washington Post newspaper said the U.S. government believed that 15 buildings at Abqaiq had been damaged on the west-northwest sides, not the southern sides facing Yemen.


On Saturday, CEO Amin Nasser said that "work is underway" to restore production, but the incident could affect investor confidence ahead of Aramco's stock market debut.

Yemen's Iran-backed Houthi rebels claimed responsibility for the attack, but USA officials say Iran is responsible.

"The Secretary-General condemns Saturday's attacks on Aramco oil facilities in the Eastern Province in the Kingdom of Saudi Arabia claimed by the Houthis", according to a statement from spokesman Stephane Dujarric.

The minister said the attacks, however, did not have any impact on the supply of electricity and water supplies from the fuel, or on the supply of the domestic market of hydrocarbons.

The attack is the single worst sudden disruption to the oil market ever, and senior members of the United States government are laying the blame on Iran.

Iranian President Hassan Rouhani has said prevention of United States "aggression" is the only way to ensure regional security.

In the near term, he says, this won't reduce the amount of oil available on the market, because there is large volume of oil in storage in Saudi Arabia and other countries.

But the attacks on these two installations will mean the loss of about 5% of the global oil supply, which could increase the price of oil globally.

The attack comes after US President Donald Trump said a meeting with Iranian President Hassan Rouhani was possible at the United Nations General Assembly in NY this month. It remains unclear how King Salman and his assertive son, Crown Prince Mohammed bin Salman, will respond to an attack targeting what analysts describe as the heart of the Saudi oil industry.

Iranian Foreign Ministry spokesman Abbas Mousavi dismissed the USA allegation that it was responsible as "pointless".

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