Published 16:16 IST, September 16th 2019
Energy prices hikes as Saudi suffers oil attack, US blames Iran
Energy prices hikes as Saudi suffers oil attack, US blames Iran.Iran for its part called the U.S. allegations “maximum lies.” The Houthis warned of more attacks
On September 16, Global energy prices spiked after a weekend attack on key oil facilities in Saudi Arabia caused the worst disruption to world supplies on record, an assault for which President Donald Trump warned that the U.S. was “locked and loaded” to respond. U.S. officials offered satellite images of the damage at the heart of the kingdom’s crucial Abqaiq oil processing plant and a key oil field, alleging the pattern of destruction suggested the attack on Saturday came from either Iraq or Iran — rather than Yemen, as claimed by Iranian-backed Houthi rebels there.
More attacks on Oil facilities?
Iran for its part called the U.S. allegations “maximum lies.” The Houthis on Monday warned of more attacks on Saudi oil facilities and urged foreign companies doing business in the kingdom to stay away from its energy sites. Yahia Sarie, a rebel spokesman, said facilities such as the Abqaiq oil processing plant and the oil field hit this weekend could again “be targeted at any time.” In Vienna, U.S. Secretary of Energy Rick Perry condemned what he called “Iran’s attack on the Kingdom of Saudi Arabia” in an address to the International Atomic Energy Agency’s general conference.“This behavior is unacceptable and they must be held responsible,” Perry said of Iran.
“Make no mistake about it, this was a deliberate attack on the global economy and the global energy market.”
He added that “despite Iran’s malign efforts, we are very confident that the market is resilient and will respond” and said that Trump has authorized the release of strategic oil reserves should the U.S. need them. But actions on any side could break into the open a twilight war that’s been raging just below the surface of the wider Persian Gulf in recent months. Already, there have been mysterious attacks on oil tankers that America blames on Tehran, at least one suspected Israeli strike on Shiite forces in Iraq, and Iran has shot down a U.S. military surveillance drone.
Hike in Energy supplies
Benchmark Brent crude gained nearly 20% in the first moments of trading Monday before settling down to over 8% higher as trading continued. A barrel of Brent traded up $5.33 to $65.55. That spike represented the biggest percentage value jump in Brent crude since the lead up to the 1991 Gulf War that saw a U.S.-led coalition expel Iraqi dictator Saddam Hussein’s forces from Kuwait. U.S. benchmark West Texas crude was up around 8%. U.S. gasoline and heating oil similarly were up over 8% and 7% respectively before markets opened in New York.
Saturday’s attack halted production of 5.7 million barrels of crude a day, more than half of Saudi Arabia’s global daily exports and more than 5% of the world’s daily crude oil production. Most of that output goes to Asia. At 5.7 million barrels of crude oil a day, the Saudi disruption would be the greatest on record for world markets, according to figures from the Paris-based International Energy Agency. It just edges out the 5.6 million-barrels-a-day disruption around the time of Iran’s 1979 Islamic Revolution, according to the IEA.
The US confident of its role
Saudi Arabia has pledged that its stockpiles would keep global markets supplied as it rushes to repair damage at the Abqaiq facility and its Khurais oil field. Trump said the U.S. had reason to believe it knows who was behind the attack. His secretary of state had blamed Iran the previous day. He assured his Twitter followers that “we are ... locked and loaded” depending on verification and were waiting to hear from the Saudis as to who they believe was behind the attack and “under what terms we would proceed!”
Updated 17:02 IST, September 16th 2019