Published: Wed, September 18, 2019
Markets | By Otis Pena

Iran officially warns USA against accusations of attack on Saudi Aramco

Iran officially warns USA against accusations of attack on Saudi Aramco

Iran's President Hassan Rouhani said on Wednesday (Sept 18) that Teheran did not want conflict in the region and accused the United States and a Saudi-led military coalition of starting a war in Yemen, according to Iranian news agencies.

Saudi officials separately planned to share information about the weapons used to attack a Saudi oil field and the world's largest crude oil processing plant Saturday.

Yemen's Iran-backed Houthi rebels had said they were behind the attacks.

While Trump initially said the "locked and loaded" to respond, he has since signaled that he isn't eager for another Middle East conflict.

Oil prices tumbled 6% on Tuesday after the Saudi energy minister said the kingdom had restored oil supplies to customers at their level before the attacks by drawing from its inventories.

The U.S. and its Gulf allies "assumed the Iranians would take the maximum pressure without any significant reaction", said David Roberts, an assistant professor at King's College London who studies the Gulf.

"With all that being said, we'd certainly like to avoid" war, he said. "We don't want conflict in the region".

US Defense Secretary Mark Esper said the US was preparing a response. The kingdom's decision to enter the International Maritime Security Construct came ahead of a planned visit by US Secretary of State Mike Pompeo.

Trump said he is not looking to meet Rouhani during a United Nations event in NY this month.

The Saudi-led coalition, which is bogged down in a five-year war in neighbouring Yemen, reiterated the assessment that the Huthis were not behind it, pointing the finger at Iran for providing the arms.

The attacks on Saudi oil infrastructure that took off 5.7 million bpd from global oil production were launched from southwestern Iran, according to a USA government official.

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Eighteen drones and seven cruise missiles were launched in the assault, Al-Malki said, with three missiles failing to make their targets.

"We've been tougher on Iran than any administration in history with the sanctions we've put on them up to and including yesterday from the briefing room", he said.

Trump has repeatedly said that the onus is on Saudi Arabia when it comes to dictating the path forward and he's made clear he is in no rush.

With the Huthis threatening further attacks, world powers urged restraint. Signs of an escalation in tensions could push the oil price up again, analysts say.

- Saudi Arabia's oil minister said that flows through the country's pipeline to Bahrain were being restarted. He said the missiles have been used by Iran's Revolutionary Guards.

Benchmark U.S. crude fell about $1 to $58.29 per barrel in early trading.

Both later receded, but remained up by more than 10 percent on the day by mid-afternoon in Europe. Saturday's attacks effectively shut 5% of global oil output.

"They're in the process of assessing the damage".

The US has also said it will tap into its reserves.

- Buyers of Saudi crude are being asked to take heavier grades, several trading sources said, including Indian Oil Corp and PetroChina in September. They also wish to shatter global confidence in the Saudi oil industry and could strike a major strategic blow against the economy of their top regional adversary by compromising, delaying, or canceling the Aramco IPO, which is a pivotal element of Riyadh's development strategy for the coming decade.

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