2630

Views

Saudi Military Blames Iran for Attack on Abqaiq

alt
Weapons components, allegedly Iranian in origin, displayed at a Saudi press conference Wednesday (Saudi Foreign Ministry)

By The Maritime Executive 2019-09-18 13:55:46

On Wednesday, Saudi officials displayed what they described as drone and missile wreckage from last weekend's attacks on the Abqaiq oil processing complex. 

Yemen-based, Iranian-sponsored Houthi rebels have claimed responsibility for the attacks, but Abqaiq is hundreds of miles from the Houthi-held territory and far beyond the sophistication of the group's previous activities.American security officials told NPR on Wednedsay that they have satellite imagery showing Iranian forces setting up missiles and drones at launch sites prior to the incident - circumstantial evidence that the attack may have been carried out by Iran itself rather than its regional proxies. 

The U.S. State Department has accused Iran of conducting the attack, and on Wednesday Saudi officials partially followed suit, saying that the attacks were "unquestionably" backed by Iran. Saudi Arabia's defense department asserts that the attacks originated from the north of Abqaiq - away from Yemen - and that the equipment used was Iranian in origin. At a press conference Wednesday, Saudi military spokesman Col. Turki al-Maliki said that defense analysts are still working to confirm the launch location. 

"The direction of the attack is coming from the north using advanced capabilities, not the south, and these are the kind of weapons [Iran's Islamic Revolutionary Guard Corps] uses," said al-Maliki. 

Oil markets react

The Abqaiq attack damaged a facility that handles five percent of the world's crude supply, and the oil markets responded accordingly. After spiking by 20 percent in early trading Monday, Brent closed up 14 percent Monday night - the largest single-day increase since the Persian Gulf War. The index fell back six percent Tuesday and another two percent Wednesday on news that Saudi Aramco is quickly restoring lost production. 

Saudi Aramco president and CEO Amin Nasser said Tuesday that production at Abqaiq stands at two billion barrels per day, or about 40 percent of capacity. 

“Not a single shipment to an international customer has been or will be missed or canceled as a result of these attacks,” Nasser said Tuesday. “We have proven that we are operationally resilient and have confirmed our reputation as the world’s leading supplier. The company has met its commitments to its international customers, even in challenging situations, including past Gulf conflicts.”

Some independent analysts expressed skepticism about Saudi Aramco's ability to rapidly restore production, given the extent of the damage. “Don’t get too excited. There is clear risk of a slower restart of Saudi Arabian oil production despite the optimistic guidance," said Rystad Energy chief oil market analyst Bjørnar Tonhaugen. Rystad estimates that up to an average of two million bpd will remain shut in during September and October, with full restoration of processing capacity only returning towards the end of the year.

Even in the event of a supply interruption, the world's emergency energy supplies are in good shape, according to the International Energy Agency. IEA member countries hold about 1.55 billion barrels of emergency stocks, or about 15 days of total world oil demand. These could be drawn upon in an emergency collective action and would be more than enough to offset any significant disruption in supplies for an extended period of time, IEA said. 

Pompeo arrives in Saudi Arabia

U.S. Secretary of State Mike Pompeo arrived in Jeddah Wednesday night to discuss the attack with Saudi Crown Prince Mohammed bil Salman. Pompeo again blamed Iran for the attacks, which he described as an "act of war" by Tehran, and he dismissed Houthi claims of responsibility as "fraudulent."

Just before Pompeo's arrival, Saudi Arabia announced that it will formally join the U.S. maritime security patrol effort for the Strait of Hormuz and the Persian Gulf. U.S. President Donald Trump has called on international partners to participate in and finance efforts to ensure the safety of shipping in the region. Six tankers were damaged in limpet mine attacks off Fujairah. in May and June, and the U.S. asserts that Iran was responsible.