Saudi Oil Facilities Remain Targets After Drone Strikes, Yemen’s Houthis Say
The Iranian-backed rebel group said its weapons can reach anywhere in Saudi Arabia.
(Bloomberg) -- Iranian-backed Yemeni rebels said oil installations in Saudi Arabia remain a target after drone attacks on two major sites slashed the kingdom’s output by half and triggered a record surge in oil prices.
The rebel group said its weapons could reach anywhere in Saudi Arabia. Saturday’s strikes were carried out by aircraft equipped with a new type of engine, the Houthi rebel group said.
“We assure the Saudi regime that our long hand can reach wherever we want, and whenever we want,” Houthi spokesman Yahya Saree said in a statement. “We warn companies and foreigners not to be present in the facilities that were hit in the strikes because they are still within range and may be targeted at any moment.”
U.S. Secretary of State Mike Pompeo said Sunday that there was no evidence the raids were carried out from Yemen. He blamed Iran, as did Secretary of Energy Rick Perry on Monday.
“The U.S. wholeheartedly condemns Iran’s attack on the kingdom of Saudi Arabia. We call on other nations to do the same,” Perry said at a meeting of the International Atomic Energy Agency in Vienna. “This behavior is unacceptable. They must be held responsible.”
President Donald Trump said the U.S. is “locked and loaded depending on verification” of the culprit. Russia called on countries not to rush to conclusions over who was responsible, Kremlin spokesman Dmitry Peskov said.
Iran denied responsibility.
“Accusing Iran of the attacks is in line with the U.S.’s maximum-lies policy,” said Abbas Mousavi, spokesman at the foreign ministry in Tehran. “Such accusations are unsurprising, unacceptable and baseless.”
Saudi Arabia has yet to assign blame. Its state oil company Saudi Aramco is due to give an update on Monday following the attacks on a major oil field and the world’s biggest crude-processing facility at Abqaiq. Oil posted its biggest ever intraday jump to more than $71 a barrel after the attack knocked out about 5% of global supplies.
The Trump administration and Saudi leaders now face a difficult choice in how to respond to Iran or its proxies without triggering a broader conflict that could spiral out of control with potentially devastating consequences for global oil markets and the world economy. Neither country has tipped its hand.
“There’s no great response here,” said Aaron David Miller, senior fellow at the Carnegie Endowment for International Peace. “The question becomes how does the U.S. navigate between not allowing this precedent to stand on one hand, and avoiding a punitive escalation or one designed to deter future attacks without an escalation. And the answer is there is no answer.”
Trump officials had recently floated the idea of talks between the president and his Iranian counterpart at the United Nations General Assembly this month, after more than a year of escalating tensions between the two countries following the U.S. withdrawal from the 2015 nuclear deal.
Mousavi on Monday confirmed Rouhani would travel to New York, but said he had “no plans” to meet Trump. Iran has consistently said that no progress was likely in improving ties without the U.S. first removing sanctions on Iranian oil exports. The downing in June of a U.S. Navy drone by Iranian forces almost triggered a conflict.
The circumstances of Saturday’s attack remain unclear. Two administration officials said on Sunday that cruise missiles may have been used. The officials, who asked not to be identified discussing internal deliberations, didn’t rule out the use of armed drones but said the range was beyond anything the Houthis had carried out in the past.
The U.S. government has determined there were 19 points of attack at the crude-processing facility and the Khurais oil field, all on the north or northwest-facing sides -- suggesting the weapons used came from that direction.
Iraq lies to the north, and the U.S. in the past has accused Iran of stashing explosives with affiliated militias in the country. Yemen is hundreds of miles to the south.
Saudi Arabia entered Yemen’s civil war in 2015 to push back Houthi rebels who captured the capital, Sana’a. Despite devastating aerial bombardment and support for groups on the ground, it has struggled to turn the tide of the war or reinstate the internationally recognized government of Yemen President Abd Rabbuh Mansur Hadi. The Saudi-led coalition has instead watched local allies turn their guns on each other in recent weeks while the U.S. has said it’s looking to talk to the Houthis directly about ending the war.
While analysts estimate Saudi Arabia may be able to restore half of the lost production as early as Monday, Trump said on Twitter Sunday that he’s authorized the release of oil from the Strategic Petroleum Reserve if needed “in a to-be-determined amount sufficient to keep the markets well-supplied.”
The stock of about 645 million barrels of crude and petroleum products could help meet demand during the time it would take for the Saudis to repair the facilities. Trump also told U.S. agencies to expedite permitting approvals of oil pipelines.
--With assistance from Jonathan Tirone.
To contact the reporter on this story: Abbas Al Lawati in Dubai at aallawati6@bloomberg.net
To contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Mark Williams
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