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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.
UPDATE: 14/09/2019 20h00
The attacks will cut the kingdom’s output by 5.7 million barrels per day (bpd), according to a statement from state-run oil company Saudi Aramco, or more than 5% of global oil supply, knocking out more than half the Kingdom’s output.
And while Aramco is confident that it can recover quickly, if it can't, however, the world could face a production shortage of as much 150 million barrels per month, sending oil prices soaring into triple digits while increasing tensions in the Middle East.
U.S. Secretary of State Mike Pompeo on Saturday accused Iran of leading attacks on Saudi oil plants. While the Trump administration informed is prepared to tap U.S. emergency oil reserves if necessary, according to a Department of Energy spokeswoman.
This comes as Yemen’s Houthi forces 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.
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.
“Abqaiq is perhaps the most critical facility in the world for oil supply,” said Jason Bordoff, who runs the Center On Global Energy Policy at Columbia University and served on the U.S. National Security Council during Barack Obama’s presidency.
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.
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 oil tankers in Gulf waters. Saturday’s attacks appeared to be the most brazen yet.
Saudi Arabia, leading a Sunni Muslim military 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.
State-run Ekhbariya TV, 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.
“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.