Saudi Arabia oil production reduced by drone strikes

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Saudi Arabia's oil production has been severely disrupted by drone attacks on two major oil facilities run by state-owned company Aramco, reports say.

Sources quoted by Reuters and WSJ said the strikes had reduced production by five million barrels a day – nearly half the kingdom's output.

The fires are now under control at both facilities, Saudi state media say.

A spokesman for the Houthi rebel group in Yemen said it had deployed 10 drones in the attacks.

The Saudis lead a Western-backed military coalition supporting Yemen's government, while Iran backs the Houthi rebels.

The Houthi spokesman, Yahya Sarea, told al-Masirah TV, which is owned by the Houthi movement and is based in Beirut, that further attacks could be expected in the future.

He said Saturday's attack was one of the biggest operations the Houthi forces had undertaken inside Saudi Arabia and was carried out in "co-operation with the honourable people inside the kingdom".

TV footage showed a huge blaze at Abqaiq, site of Aramco's largest oil processing plant, while a second drone attack started fires in the Khurais oilfield.

"At 04:00 (01:00 GMT), the industrial security teams of Aramco started dealing with fires at two of its facilities in Abqaiq and Khurais as a result of… drones," the official Saudi Press Agency (SPA) reported.

"The two fires have been controlled."

There have been no details on the damage but AFP news agency quoted interior ministry spokesman Mansour al-Turki as saying there were no casualties.

Later, the SPA reported that Saudi Crown Prince Mohammed bin Salman had told US President Donald Trump in a telephone conversation that the kingdom was "willing and able to confront and deal with this terrorist aggression".

The White House said Mr Trump had offered US support to help Saudi Arabia defend itself.

The US ambassador to Saudi Arabia, John Abizaid, condemned the drone attacks.

"These attacks against critical infrastructure endanger civilians, are unacceptable, and sooner or later will result in innocent lives being lost," he said.

United Nations envoy Martin Griffiths described the attacks as "extremely worrying" in a statement in which he called on all parties in the Yemen conflict to exercise restraint.+

Abqaiq is about 60km (37 miles) south-west of Dhahran in Saudi Arabia's Eastern Province, while Khurais, some 200km further south-west, has the country's second largest oilfield.

Saudi security forces foiled an attempt by al-Qaeda to attack the Abqaiq facility with suicide bombers in 2006.

Markets await news from key facilities

Analysis by BBC business correspondent Katie Prescott

Aramco is not only the world's biggest oil producer, it is also one of the world's most profitable businesses.

The Khurais oilfield produces about 1% of the world's oil, and Abqaiq is the company's largest facility – with the capacity to process 7% of the global supply. Even a brief or partial disruption could affect the company, and the oil supply, given their size.

There was a sharp intake of breath as analysts I spoke to today digested the information that reports suggest that half of Saudi Arabia's oil production could have been knocked offline by these attacks.

The country produces 10% of the world's crude oil. Cutting this in half could have a significant effect on the oil price come Monday when markets open.

However, Aramco has yet to confirm the scale of the damage.

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.

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.

An attack method open to all

This latest attack underlines the strategic threat posed by the Houthis to Saudi Arabia's oil installations.

The growing sophistication of the Houthis' drone operations is bound to renew the debate as to where this capability comes from. Have the Houthis simply weaponised commercial civilian drones or have they had significant assistance from Iran?

The Trump administration is likely to point the finger squarely at Tehran, but experts vary in the extent to which they think Iran is facilitating the drone campaign.

The Saudi air force has been pummelling targets in Yemen for years. Now the Houthis have a capable, if much more limited, ability to strike back. It shows that the era of armed drone operations being restricted to a handful of major nations is now over.

Drone technology, albeit of varying degrees of sophistication, is available to alRead More – Source