Global energy prices rocketed higher Monday after a weekend attack on oil facilities in Saudi Arabia that disrupted more than 5 percent of the world’s daily supply.
The incident has reignited fears of a U.S. military confrontation in the Middle East.
The U.S. government released satellite images showing the extent of the destruction at the Abqaiq oil processing plant and a key oil field, where an estimated 5.7 million barrels of oil are produced each day – and suggested that the assault originated either in Iran or Iraq rather Yemen, where Saudi Arabia is fighting Iran-backed Houthi rebels.
Brent crude oil, an international gauge, surged nearly 20 percent when markets in Asia opened before settling down to about a 10 percent spike as trading continued.
U.S. benchmark West Texas crude oil was up around 9 percent. U.S. gasoline and heating oil were up over 8 percent and 7 percent, respectively.
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Houthi rebels claimed responsibility for Saturday’s attack, which they said was carried out using drones, although the scale of the destruction indicates that cruise missiles may also have been used. There has been no independent verification.
Secretary of State Mike Pompeo blamed Iran, but President Donald Trump stopped short of explicitly pointing the finger at Tehran, saying only that the U.S. was “locked and loaded” to respond with possible military action once the culprit is determined.
Pompeo did not provide specific proof the attacks came from Iran.
Fabian Hinz, an expert on Middle East conflicts at the James Martin Center for Nonproliferation Studies in Monterey, Calif., said Houthi rebels have previously launched attacks against Saudi targets using a combination of drones and missiles.
Abbas Mousavi, a spokesman for Iran’s Foreign Ministry in Tehran, angrily dismissed Pompeo’s allegations as “blind and futile comments.”
Mousavi said that the “Americans adopted the ‘maximum pressure’ policy against Iran, which, due to its failure, is leaning toward ‘maximum lies.'”
Hawkish voices in Iran said the country was ready for military confrontation if necessary.
“We have been constantly preparing ourselves for a full-fledged war,” Amir Ali Hajizadeh, commander of the Iran’s Revolutionary Guard Corp aerospace force, told the Tehran Times on Sunday. He warned the U.S. that its military assets in the Middle East were within striking distance of Iran’s military.
Trump said he was “waiting to hear” from the Saudis about who it thought was responsible “and under what terms we would proceed.”
Iran and Saudi Arabia, bitter rivals who have long struggled for regional dominance, have been fighting a proxy war in Yemen since at least 2015. Iraq, home to powerful Iran-backed militias, denied its airspace was used to launch an attack on the kingdom.
Saturday’s attack halted production of more than half of Saudi Arabia’s global daily exports, most of which 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.
Saudi Arabia has pledged that its stockpiles would keep global markets supplied and Trump said he has approved the release of U.S. strategic petroleum reserves “if needed” to stabilize energy markets after the attacks.
The incident could impact the price of gas for Americans, experts said.
Gradual increases may be seen at U.S. gas stations before next weekend depending on how fast the kingdom’s state-owned oil behemoth Saudi Aramco can revive lost output, said Patrick DeHaan, head of petroleum analysis at GasBuddy.
“Right now, I would classify that impact as being minor because Saudi has signaled that most of this oil production could return quickly,” said DeHaan, whose company monitors real-time fuel prices. “If it doesn’t return relatively quickly then we could be looking at minor to major impact to gasoline prices” as early as midweek.
Trump’s “locked and loaded” rhetoric mirrors remarks he made after Iran shot down a U.S. military surveillance drone in June. Trump later said that he pulled back from retaliating against Iran at the last minute. The U.S. has also blamed Iran for a series of mysterious attacks on oil tankers operating in the Persian Gulf, which Iran denies.
Increased tensions between the U.S. and Iran have followed Trump’s withdrawal last year from the nuclear accord between Iran and world powers. Those tensions have superficially softened in recent weeks amid suggestions from Trump that he is willing to hold talks with Iran’s President Hassan Rouhani, possibly on the sidelines of the United Nations’ annual general assembly in New York later this month. But Tehran has also repeatedly said that it will only consider such a meeting if Washington lifts sanctions imposed on it by Trump after he walked away from the 2015 landmark nuclear accord.
Mousavi, of Iran’s Foreign Ministry, said Monday the Trump-Rouhani meeting “will not happen.” He dismissed reports it would take place as mere “speculation.”
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Contributing: John Bacon; Dalvin Brown; Associated Press