Drones launched by Houthi rebels attacked two major oil sites in Saudi Arabia, including the world’s largest oil processing facility, sparking fires and causing what could potentially be major disruption to the global oil market. The attack led Saudi Arabia to shut down half of its oil production, according to several reports. That means a loss of around five million barrels of crude per day, equivalent to around 5 percent of the world’s daily production.
Saudi Aramco, the state-owned oil company, has plenty of reserves on hand but a long disruption of operations would surely affect global crude supplies. One source tells Bloomberg that Aramco is confident it will be able to restart production quickly.
It is still unclear whether anyone was injured in the attacks carried out by the Iran-aligned rebels at the Abqaiq oil processing facility and the Khurais oil field. Many foreign Aramco employees live in Abqaiq but the U.S. embassy said it isn’t aware of any injuries to Americans from the attacks.
The early morning drone strikes were clearly one of the largest attacks inside Saudi Arabia since war broke out in Yemen almost five years ago. It was also a sign of an escalation in the war because it reached deeper into Saudi territory than previous strikes. It also hit at a symbol of Saudi Arabia’s dominance in the sector. “A successful attack on Abqaiq would be akin to a massive heart attack for the oil market and global economy,” Bob McNally, who runs Rapidan Energy Group, said. It is likely Iranian expertise played a significant role in the attack since Tehran has supplied drone technology to the Houthis in Yemen.
A military spokesman who gave a short address that was aired by the Houthi’s satellite news channel said 10 drones carried out the coordinated attack. He warned attacks could worsen. “The only option for the Saudi government is to stop attacking us,” Yahia Sarie said.
The attacks come as Aramco is moving forward with an initial public offering that some say could be the largest in the world. There were immediate questions about how Saturday’s attack could affect those plans. “The success of the drone strike shows the vulnerability of its infrastructure, at a time when it is trying to show itself in its best light while gearing up to float on the stock market,” the BBC’s Katie Prescott wrote. “And it raises concerns that escalating tensions in the region could pose a broader risk to oil, potentially threatening the fifth of the world’s supply that goes through the critical Strait of Hormuz.”
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