The Saudi’s largest oil-processing plant at Abqaiq and its second-largest oil field in Khurais were knocked out on Saturday, which has resulted in a deficit of about 5,7 million barrels a day of output – about half of Saudi production and about 5 percent of global production.
Oil prices spiked as much as 20 percent on fears of prolonged disruption. Sources involved in the latest damage assessments told the Financial Times that the Saudi oil production could take months to return to normal, potentially thwarting efforts to calm the market.
The White House has blamed Iran. Mike Pompeo, US Secretary of State, accused Iran of launching an “unprecedented attack”. President Donald Trump tweeted on Sunday that the US government was was “waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!”
Saudi military officials told reporters on Monday that the preliminary investigation of “debris and wreckage” shows “it belongs to the Iranian regime” and not Yemen, as the Houthi rebels in Yemen have claimed.
Also on Monday, the Wall Street Journal reported that “people familiar with the discussions” said that US officials claim that intelligence suggests that the attacks were launched from Iran.
According to Bloomberg, a source said Saudi’s “Aramco officials are growing less optimistic that there will be a rapid recovery in production.” Saudi Arabia will be able to use part of its stock of about 645 million barrels of crude and petroleum products to make up for lost production in the near term, but “Aramco could consider declaring itself unable to fulfill contracts on some international shipments – known as force majeure – if the resumption of full capacity at Abqaiq takes weeks”.
The overproduction of oil in the US is at least in partly responsible for the collapse of the price of crude since 2014. The US is today the largest crude oil producer in the world, while imports from Saudi Arabia have decreased to around 450 000 barrels per day. China, Japan, and South Korea are now large customers of Saudi Arabia.
South Korean President Moon Jae-in has pointed out that Saudi Arabia was South Korea’s top oil supplier. Last year, South Korea imported 323 million barrels of crude from Saudi Arabia, accounting for nearly 30 percent of its total oil imports, official data showed.
US shale oil drillers meanwhile welcomed the 13 percent price spike in crude, even though it is not much of a relief. The US is however still on track to become a net oil exporter by 2020.
Iran’s Defence Ministry has denied any involvement. “Quite obviously, it was a military clash between two countries. The Yemeni were one of the sides, they said themselves they did it”, the Minister said as quoted by the news agency ISNA.
His statements come hours after the Saudi Defence Ministry said it would present evidence of Iran’s involvement in the recent attacks on Saudi Aramco’s oil facilities.