Published: Tue, September 17, 2019
Worldwide | By Lisa Hogan

Oil prices jump as attack on Saudi plant jolts supply

Oil prices jump as attack on Saudi plant jolts supply

Oil prices made their biggest jump since the Gulf War on Monday after President Donald Trump warned that the USA was "locked and loaded" to respond to attacks on Saudi oil infrastructure that Washington blamed on Iran.

US President Donald Trump said "there is reason to believe that we know the culprit", adding that Washington is "locked and loaded" to respond, pending verification and information from Saudi Arabia.

Petrol prices are set to rise after devastating drone strikes on two oil refineries in Saudi Arabia caused shockwaves in the global market.

Yemen's Houthi rebels on Saturday took responsibility for the attacks on the Saudi Aramco oil facilities in Khurais and Abqaiq - the world's largest oil processing facility and crude oil stabilization plant.

Meanwhile, the USA secretary of state Mike Pompeo accused Tehran, the capital of Iran, of the attacks.

The Saturday attacks shut down production on roughly 5% of the world's daily production of crude oil, equal to about 5 million barrels.

"The Americans adopted the "maximum pressure" policy against Iran, which, due to its failure, is leaning towards "maximum lies"," Mousavi said in a statement.

He implicated Iran, which he claims is waging a proxy war in Yemen by funding the Houthi rebels in their conflict with the old regime backed by an worldwide coalition led by the Saudis.

The US secretary of state gave no specific evidence to back up his accusations, simply saying: "We call on all nations to publicly and unequivocally condemn Iran's attacks". Both the Houthis and Iran deny allegations by Saudi and western leaders that Tehran is funding, arming and training the rebel group.

United Kingdom foreign minister Dominic Raab said the attack was a "reckless attempt to damage regional security and disrupt global oil supplies".

"The federally-owned oil stocks are stored in huge underground salt caverns along the coastline of the Gulf of Mexico", the agency's website says.

Trump approved the release of oil from the U.S. Strategic Petroleum Reserve, which holds more than 640 million barrels of crude oil. It also produced 1.1 million barrels of natural gas liquids and 8.9 billion standard cubic feet per day of natural gas.

A senior U.S. official told media, including Reuters, that evidence indicated the attacks were launched from west or northwest of the facilities, the direction of Iran.

"Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world's energy supply", Pompeo said in a tweet on Saturday. The kingdom produces approximately 10% of the total global supply of 100 million barrels per day.

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

While Iran has denied blame for the attacks, its Yemeni allies have promised more strikes to come.

USA crude oil jumped $5.61 per barrel, or 10.2%, to $60.46 per barrel early Monday in electronic trading on the New York Mercantile Exchange.

It would reflect worries that future attacks might jeopardize global oil supplies.

The drain on the oil facility makes it a shock disruption to oil markets.

The attack on its oil infrastructure could lead Saudi Arabia to launch a military strike on Iran in retaliation, Book said.

The attack came after Mr. Trump said a meeting with Iranian President Hassan Rouhani was possible at the U.N. General Assembly in NY this month.

But Trump appeared late Sunday to play down the chances he might be willing to meet with Iranian officials, saying that reports he would do so without conditions were not accurate. The alliance has air supremacy but has come under global scrutiny over civilian deaths and a humanitarian crisis that has pushed millions to the brink of starvation.

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