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This image provided by the US government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at Saudi Aramco's Kuirais oilfield in Buqyaq, Saudi Arabia. Photo: AP

Donald Trump says US ‘locked and loaded’ as satellite photos show damage to Saudi oil facilities

  • Global energy prices spike after Trump suggests US ready to retaliate for attacks on Saudi Arabia’s oil facilities
  • The US government produced satellite photos showing what officials said were at least 19 points of impact at two sites
Saudi Arabia

Oil prices made their biggest jump since the Gulf War on Monday after Donald Trump said the US was “locked and loaded” to respond to an attack on Saudi oil infrastructure that Washington has blamed on Iran.

It is the first time the president has hinted at a potential American military response to the attack, which slashed Saudi oil production by half and led both the kingdom and the United States to announce they may tap their strategic reserves.

“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!” Trump tweeted on Sunday.

This image provided by the US government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at Saudi Aramco's Abaqaiq oil processing facility in Buqyaq, Saudi Arabia. Photo: AP

The Tehran-backed Houthi rebels in Yemen, where a Saudi-led coalition is bogged down in a five-year war, claimed Saturday’s strikes on two plants owned by state energy giant Aramco.

But US Secretary of State Mike Pompeo pointed the finger squarely at Tehran, saying there was no evidence the “unprecedented attack on the world’s energy supply” was launched from Yemen.

“The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression,” the top US diplomat said.

Saudi oil output halved as US blames Iran for ‘unprecedented’ drone attack

That drew an angry response from Tehran, where foreign ministry spokesman Abbas Mousavi said

the remarks were designed to provide a pretext for “future actions” against the Islamic republic.

China’s Foreign Ministry said it was irresponsible to blame anyone for an attack on Saudi Arabia’s oil facilities without conclusive facts, striking a cautious note after the United States blamed Iran.

China has close economic, diplomatic and energy relations with both Riyadh and Tehran and has long had to tread carefully in its ties with both. Saudi Arabia is China’s top oil supplier of the year to date.

The US government produced satellite photos showing what officials said were at least 19 points of impact at two Saudi energy facilities, including damage at the heart of the kingdom’s crucial oil processing plant at Abqaiq.

Officials said the photos show impacts consistent with the attack coming from the direction of Iran or Iraq, rather than from Yemen to the south.

Iraq denied that its territory was used for an attack on Saudi Arabia and US officials said a strike from there would be a violation of Iraq’s sovereignty.

This image provided by the US government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at Saudi Aramco's Abaqaiq oil processing facility in Buqyaq, Saudi Arabia. Photo: AP

US officials said additional devices, which apparently did not reach their targets, were recovered northwest of the facilities and were being jointly analysed by Saudi and American intelligence.

The officials, who spoke on condition of anonymity to discuss intelligence matters, did not address whether the drone could have been fired from Yemen, then taken a roundabout path, but did not explicitly rule it out.

Crown Prince Mohammed bin Salman, the de facto ruler of Saudi Arabia, has said the kingdom was “willing and able” to respond to this “terrorist aggression”.

“This has the potential to be as significant as Pearl Harbour,” said Randy Larsen, a former professor and department head at the US military’s National War College.

But a tit-for-tat strike on Iranian oilfields was “highly unlikely”, according to Middle East expert James Dorsey.

“The Saudis do not want an open conflict with Iran. The Saudis would like others to fight that war, and the others are reluctant,” said Dorsey, from the S. Rajaratnam School of International Studies in Singapore.

This image provided by the US government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at Saudi Aramco's Khurais oilfield in Buqyaq, Saudi Arabia. Photo: AP

Instead, the kingdom focused on restoring production at the plants as global energy prices spiked on Monday.

Saturday’s explosions set off fires that engulfed the Abqaiq plant, the world’s largest oil processing facility, and nearby Khurais, which hosts a massive oilfield.

Saudi’s energy infrastructure has been hit by the Houthis many times before, but this strike was of a different order, abruptly halting 5.7 million barrels per day or about six per cent of the world’s oil supply.

Drone attacks spark fires at Saudi Arabia’s largest oil-processing facilities

The attacks sent oil prices skyrocketing on Monday, with Brent futures up US$12 – or nearly 20 per cent – in the first few minutes of business, while WTI jumped more than US$8, or 15 per cent. It was the biggest rise since the 1990-1991 Gulf War.

For oil markets, it was the single worst sudden disruption ever, and while Saudi Arabia may be able to return some supply within days, the attacks highlight the vulnerability of the world’s most important exporter.

“The genie is out of the bottle,” said Bill Farren-Price, director of the London-based RS Energy Group.

“It is now clear that Saudi and other Gulf oil facilities are vulnerable to this kind of attack, which means that the geopolitical risk premium for oil needs to rise.”

No casualties were reported but the full extent of the damage was not clear and reporters were kept away from the plants amid beefed-up security.

Aramco also said it will dip into its reserves to offset the disruption. 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.

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A significant volume of oil production can be restored within days but the company would need weeks to reach full output again, Bloomberg reported on Sunday, citing unnamed sources.

Trump tweeted that he had “authorised the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount”.

The president also “informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States,” without naming specific projects.

Fires burn in the distance after an attack on Saudi company Aramco's oil processing facilities, in Buqayq, Saudi Arabia. Photo: Reuters

Following a phone call between Trump and Prince Mohammed, the White House condemned the attacks on “infrastructure vital to the global economy”.

Tehran and Washington have been at loggerheads since May last year, when Trump pulled the US out of a landmark 2015 deal with world powers that promised Iran relief from sanctions in return for curbs on its nuclear programme.

Saudi Arabia has spent billions on military hardware but recent events have underscored the vulnerability of its infrastructure to attack.

The Houthis have staged repeated cross-border missile and drone attacks targeting Saudi airbases and other facilities in what they say is retaliation for the Riyadh-led bombing campaign on rebel-held areas in Yemen.

Additional reporting by Associated Press, Reuters and Bloomberg

This article appeared in the South China Morning Post print edition as: trump hints at action after saudi oil attack
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