Oil hits 28-year high after Saudi refinery hit

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September 17, 2019

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Oil hits 28-year high after Saudi refinery hit

Source: Agencies | 00:05 UTC+8 September 17, 2019 |

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An attack on Saudi Arabia that shut 5 percent of global crude output triggered the biggest surge in oil prices since 1991, after US officials blamed Iran and US President Donald Trump said Washington was “locked and loaded” to retaliate.

The Houthi movement that controls Yemen’s capital claimed responsibility for the attack, which damaged the world’s biggest crude oil processing plant. Iran denied blame and said it was ready for “full-fledged war.”

Two sources briefed on state oil company Saudi Aramco’s operations said it might take months for Saudi oil production to return to normal. Earlier estimates had suggested it could take weeks.

Oil prices surged by as much as 19 percent before coming off peaks.

The intraday jump was the biggest since the 1991 Gulf War.

Prices eased after Trump announced that he would release US emergency supplies and producers said there were enough stocks stored up worldwide to make up for the shortfall. But traders still spoke of a long-term price increase as markets absorb the proof that global supply can be so sharply hit.

“There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!” Trump said on Twitter on Sunday.

US Energy Secretary Rick Perry pinned the blame squarely on Iran for “an attack on the global economy and the global energy market.”

“The United States wholeheartedly condemns Iran’s attack on Saudi Arabia and we call on other nations to do the same,” he said in a speech to an annual meeting in Vienna of the UN nuclear watchdog, the IAEA. He added he was confident the oil market “is resilient and will respond positively.”

Iran has denied blame for the attacks, including bombings of tankers in the Gulf and previous strikes claimed by the Houthis.

‘We can hit you anywhere’

Foreign Ministry spokesman Abbas Mousavi called the US accusations of Iranian involvement in Saturday’s attacks “unacceptable and entirely baseless.”

Houthi military spokesman Yahya Sarea said the group carried out Saturday’s pre-dawn attack with drones, including some powered by jet engines.

“We assure the Saudi regime that our long arm can reach any place we choose and at the time of our choosing,” Sarea tweeted. “We warn companies and foreigners against being near the plants that we struck because they are still in our sights and could be hit at any moment.”

Iran said yesterday it had seized a vessel accused of smuggling diesel fuel to the United Arab Emirates. Tehran has long fought against smuggling of its subsidized fuel.

Russia and China said it was wrong to jump to conclusions about who was to blame for the attack on Saudi Arabia.

“Proposals on tough retaliatory actions, which appear to have been discussed in Washington, are even more unacceptable,” Russia’s Foreign Ministry said in a statement.

Britain — Washington’s close ally but wary of its hardline Iran policy — stopped short of ascribing blame but described the assault as a “wanton violation of international law.” Washington has imposed its “maximum pressure” strategy on Iran since last year when Trump pulled out of an international deal that gave Tehran access to world trade in return for curbs on its nuclear programme.

US allies in Europe oppose Trump’s strategy, arguing that it provides no clear mechanism to defuse tensions, creating a risk that the foes could stumble into war.

Trump has said his goal is to force Iran to negotiate a tougher agreement and has left open the possibility of talks with President Hassan Rouhani. Iran says there can be no talks until Washington lifts sanctions. Its foreign ministry said yesterday Rouhani would not meet Trump. Officials in big energy-exporting countries said global markets could cope with the Saudi outage.

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Oil hits 28-year high after Saudi refinery hit

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