Published: Mon, September 16, 2019
Markets | By Otis Pena

Saudi Arabia races to restore oil supply after strike blamed on Iran

Saudi Arabia races to restore oil supply after strike blamed on Iran

Global energy prices spiked on Monday after a weekend attack on key oil facilities in Saudi Arabia caused the worst disruption to world supplies on record, an assault for which President Donald Trump warned that the USA was "locked and loaded" to respond.

Early on Saturday, two major Saudi Arabian oil facilities were set ablaze in a coordinated drone attack, forcing the kingdom to shut down half its oil production and sparking fears of a big jump in oil prices.

Pompeo said there was no evidence the attack came from Yemen, where a Saudi-led coalition has been battling the Houthis for over four years in a conflict widely seen as a proxy war between rivals Sunni Muslim Saudi Arabia and Shi'ite Iran.

Saree claimed the attack was the "largest to date" and that it "required extensive intelligence preparations", including information from sources inside Saudi Arabia.

In global markets, gold and silver prices shot up as Middle East geopolitical tensions boosted the demand of safe-haven assets like gold.

Regional tensions have escalated since Washington quit an global nuclear deal and extended sanctions on Iran. It was last at $60.89 a barrel while Brent crude was up 13% at $68.06 after earlier rising to $71.95.

Riyadh has built five giant underground storage facilities in various parts of the country that can hold tens of millions of barrels of various refined petroleum products, to be tapped during times of crisis. Fifty percent of their output was still potentially halted on Saturday evening according to the Saudi interior ministry, and that means that 5% of world production was offline.

While no one immediately claimed responsibility for the attack, media reports state that Yemen's Houthi rebels have claimed responsibility for the drone attacks. On MCX, October gold futures prices today shot up by 1.4% to ₹38,030 per 10 grams as compared to Friday's close of ₹37,503.

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On Saturday, the Department of Energy said the United States can deploy resources from the Strategic Petroleum Oil Reserve, which holds almost 645 million barrels of oil.

The U.S. crude futures surged more than 15 percent to $63.34 a barrel.

"The United States will work with our partners and allies to ensure that energy markets remain well supplied and Iran is held accountable for its aggression", the top U.S. diplomat said.

Later, Pompeo called on every nation to condemn the attacks. In daylight, Saudi state television aired a segment with its local correspondent near a police checkpoint, a thick plume of smoke visible behind him.

President Donald Trump suggested on Sunday that the USA military could be used to respond to the terrorist attacks on oil sites in Saudi Arabia, for which us officials say Iran was responsible.

GARCIA-NAVARRO: So this has happened as the increasing its so-called maximum pressure campaign on Iran, using sanctions and the like to force Iran to renegotiate its nuclear deal.

The Huthis also claimed a May drone attack on two oil pumping stations on Saudi Arabia's key east-west pipeline, which caused a days-long shutdown.

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