October 17, 2019
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World's biggest oil producer reduces output by 50 percent after Saudi attacks

 A file image shows a gas flame behind pipelines in the desert at the Khurais oil field, about 160 kilometers from Riyadh, Saudi Arabia, June 23, 2008. EPA-EFE FILE/ALI HAIDER

A file image shows a gas flame behind pipelines in the desert at the Khurais oil field, about 160 kilometers from Riyadh, Saudi Arabia, June 23, 2008. EPA-EFE FILE/ALI HAIDER

By Suleiman al-Assad

Riyadh, Sep 14 (efe-epa).- Saudi Arabia on Saturday announced a 50-percent reduction in the production of state energy company Aramco – the world's largest oil producer – following a destructive drone attack by Yemeni Houthi rebels against two of its refineries.

The attack, which was carried out by 10 unmanned aircraft, has not only had a significant impact on the global economy and the world's oil supply chain, but has also left a profound mark on international politics, as the United States blamed Iran for backing the Houthis at a time of heightened tensions between Washington and Tehran.

The drone attacks hit Hijra Khurais – one of Saudi Arabia's largest oil fields, producing about 1.5 million barrels a day – and Abqaiq, the world's biggest crude stabilization facility, which processes seven million barrels of Saudi oil a day, or about 8 percent of the world's total output.

Around 20 hours after the incident, the newly-appointed Saudi minister of energy, Prince Abdulaziz bin Salman, was forced to publicly acknowledge that Aramco had stopped the production of some 5.7 million barrels of crude, about half of its total output.

The minister said in a statement carried by the official Saudi Press Agency that the attacks "resulted in a temporary suspension of production at Abqaiq and Khurais plants."

Part of the reduction will be compensated for by drawing from Aramco’s oil stocks to cover customer demand, he added.

The statement explained that the attacks also prompted Aramco to halt associated gas production of about 2 billion cubic feet (56.63 million cubic meters) per day used to produce 700,000 thousand barrels of liquid gas, thus reducing the total supply of ethane and natural gas by up to 50 percent.

Aramco, considered by the credit agencies Moody's and Fitch as the most profitable company in the world – with a net profit that they estimated at $ 111.1 billion in 2018 – said it was still assessing the damages and would offer more information of their scope over the next 48 hours.

Although there were no power outages or water supply disruptions in the Arab country, US President Donald Trump himself acknowledged during a telephone conversation with Saudi Crown Prince Mohamed bin Salman that the attack had affected both the global and the US economy.

Trump also offered to cooperate in any way that could help ensure the security and stability of the US' strategic partner in the Middle East.

The kingdom currently leads a military coalition in Yemen fighting against the Houthi rebels and supporting the internationally-recognized government, whose leadership is mostly exiled in Saudi Arabia.

However, Salman assured Trump that the kingdom had the "will and ability to confront and treat this terrorist aggression" by the Houthis.

Meanwhile, Saudi officials indicated Aramco could return to normal levels of oil production by Monday.

On Saturday, the International Energy Agency – a Paris-based group representing top energy-consuming nations – said it was in contact with Saudi authorities and major producer and consumer nations.

"For now, markets are well supplied with ample commercial stocks," the group said. "The IEA is monitoring the situation in Saudi Arabia closely."

Markets haven't seen a shutdown on the scale of Saudi's five million barrels since Iraq invaded Kuwait in 1990. That conflict, which led to an international military intervention, saw the loss of four million barrels a day.

A sustained Saudi outage of several million daily barrels would likely prod US and Europe officials to release emergency stockpiles, according to officials with the Organization of the Petroleum Exporting Countries and analysts

While the group of industrialized nations would normally coordinate a release, the US would be expected to turn to its own Strategic Petroleum Reserve to help global markets avoid price spikes.

US Secretary of State Mike Pompeo accused Tehran of sponsoring the attacks and insisted there was no evidence to suggest that they had even been launched from Yemen.

"Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world's energy supply," Pompeo said on Twitter.

"Tehran is behind nearly 100 attacks on Saudi Arabia while (President Hassan) Rouhani and (Foreign Minister Javad) Zarif pretend to engage in diplomacy,” he added.

At the same time, the United Nations' special envoy for Yemen, Martin Griffiths, said he was "extremely concerned" about the attacks and all parties in the conflict to prevent any further incidents, which he said posed a "serious threat" to regional security, complicated the already-fragile situation and jeopardized UN-led political efforts. EFE-EPA

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Related content

Suspicions rise that attack on Saudi oil facilities came from outside Yemen

By Dion Nissenbaum and Summer Said

Beirut/Dubai, Sep 14 (efe-epa).- Saudi and American officials on Saturday were investigating the possibility that recent attacks on Saudi oil facilities Saturday involved cruise missiles launched from Iraq or Iran, questioning Yemeni rebel claims of responsibility, people familiar with the matter said, according to EFE/Dow Jones.

Leaders of the Houthis, the Yemeni rebels whom Saudi Arabia is trying to dislodge from the country's capital, claimed they sent a squad of drones hundreds of miles into the heart of Saudi Arabia to carry out coordinated attacks on two of the country's vital energy sites.

If true, the attacks marked the most effective and far-reaching drone strikes carried out by outgunned Houthi forces in neighboring Yemen.

But officials around the globe investigating the attack questioned the Houthi claims and suggested the strike may have come from Iraq or Iran, to the north, rather than Yemen, to the south. Iran supports a host of Shiite militias in Iraq.

Secretary of State Mike Pompeo said in a tweet that "there is no evidence the attacks came from Yemen" and accused Tehran of launching "an unprecedented attack on the world's energy supply."

The Saudi interior ministry said Saturday that the facilities were hit by a drone attack, an account confirmed by people familiar with the strikes.

But Persian Gulf officials said experts were examining the possibility that the attackers used cruise missiles, either instead of or along with drones.

A strike on Saudi facilities from Iraq isn't without recent precedent.

Earlier this summer, US officials concluded that a May 14 drone attack on Saudi Arabia's pipeline was launched from Iraq, not Yemen.

At the time, Pompeo urged Iraq's prime minister to contain the threat posed by Iran-backed forces in the country.

If Tehran carried out the attack directly, it would pose a new national security challenge for US President Donald Trump, who could be pressed to respond by striking Iran.

In June, Trump called off a strike on Iran and suggested he is willing to talk.

And the use of cruise missiles rather than drones would suggest an escalation in the conflict beyond drones.

In recent months, Houthi forces have used a new type of cruise missile to hit Saudi Arabia at least three times, according to people familiar with the investigation.

In July, Houthi forces unveiled the new type of cruise missile, called Quds, saying it could fly more than 900 miles (1,450 kilometers) and would help change the course of the war.

At the same time, the Houthi fighters unveiled a new drone they said had the same range.

This summer, two of the cruise missile strikes hit Abha airport in southwest Saudi Arabia, close to the Houthi-controlled Yemen border. A third hit a desalinization plant in the same part of the country.

No matter who carried out Saturday's attack, and where it came from, US and Saudi leaders are likely to point the finger at Tehran, which provides varying degrees of support to allies in Yemen and Iraq.

Saturday's attack is likely to deliver another setback to American attempts to open direct talks with Houthi leaders in an effort to end the four-year-old war in Yemen that has fractured as the United Arab Emirates withdrew most forces from the fight and its allies on the ground opened a new front by battling Saudi-backed forces.

Houthi leaders rebuffed American efforts to launch the talks earlier this month after Saudi-coalition airstrikes hit a detention center, killing dozens. EFE-EPA

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Trump has few options to respond to Saudi oil attack

By Jessica Donati

Washington DC, Sep 14 (efe-epa).- The recent attacks on Saudi Arabia's energy-production system thrust United States President Donald Trump into a fierce foreign-policy crosswind, at a time when his national security team is at its thinnest point in over a year, according to a Saturday report from EFE/Dow Jones.

With Iranian involvement widely suspected in Saturday's attacks, Trump faces new questions about his Iran strategy, with a diminished set of tools available to escalate his "maximum pressure" campaign of sanctions targeting the country's economy.

Trump has supported Saudi Arabia's leaders in their war against Iran-backed Houthi forces in Yemen, even as US lawmakers have soured on the conflict and grown impatient with the kingdom's crown prince.

The administration has also levied military threats against Iran, in an effort to rein in its nuclear programs and regional ambitions.

The Trump administration has imposed some of the most stringent sanctions ever on Iran's oil industry, refused to extend oil waivers and threatened secondary sanctions on entities that fail to comply.

It has also already designated Iran's Islamic Revolutionary Guard Corps as a foreign terrorist organization.

The IRGC runs Tehran's ballistic-missile programs and its specialized Quds Force has arranged weapons deliveries and advised pro-regime militias in Syria, Iraq and elsewhere in the region.

As an added challenge, the Trump administration's foreign-policy team has narrowed with the departure of national security adviser John Bolton earlier this week.

Bolton was the chief architect of the Iran strategy and the third national security adviser to leave the White House since 2017.

The post of director of national intelligence is vacant, while a new secretary of defense started in July, filling a months-long vacancy.

Secretary of State Mike Pompeo, a fellow hawk, has been a steady and vocal advocate of the maximum pressure campaign since the US withdrew from the nuclear deal with Iran and six world powers.

He clashed often with Bolton and now stands to have more sway over foreign policy than at any time since moving from the Central Intelligence Agency.

On Saturday, Pompeo delivered the first US response to the attacks on Saudi's oil output, blaming Iran and asserting there was no evidence the strikes came from Yemen, contrary to claims made by the Houthis there.

"We call on all nations to publicly and unequivocally condemn Iran's attacks. 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 secretary said on Twitter.

It isn't clear what further measures could be introduced to increase economic pressure on Iran.

The administration may hope that its intelligence tying Tehran to the attacks may convince more European allies to come around to Trump's Iran strategy, despite longstanding opposition to his approach.

However, on Saturday the response from other signatories to the Iran nuclear deal was slow, with only the United Kingdom condemning the attack.

Saturday's attacks crippled Saudi Arabia's oil production, forcing output to fall to around half its regular 9.8 million barrels a day.

Pompeo had said earlier this week that Trump could potentially meet with his Iranian counterpart, Hassan Rouhani, when world leaders converge on New York later this month for the United Nations General Assembly.

The prospects of such a meeting now appear unlikely.

Similarly, a French initiative to provide Iran economic relief from US sanctions in return for its full compliance with a multinational nuclear accord seems as doomed as earlier European efforts to mediate a solution.

Mark Dubowitz, the chief executive of the Foundation for Defense of Democracies, a Washington think tank, said this would be the worst time to give Iran sanctions relief as recommended by France, as it would be seen as giving in to blackmail.

"As the Israelis have demonstrated, sometimes only a military response to aggression from the regime in Iran and its proxies creates meaningful deterrence," he said. "Washington can't rely just on sanctions as its sole instrument of national power."

The French embassy in Washington didn't immediately respond to a request for comment.

Trump has previously opted for dialogue over conflict. For instance, he shelved plans, supported by Bolton, for a retaliatory strike after Iran shot down a US drone in June.

Prominent Republicans on Saturday were calling for a more aggressive response.

Sen. Lindsey Graham (R-SC) took to Twitter on Saturday to call on the Trump administration to prepare to retaliate against Iran for the attack, calling it another example of how the country is wreaking havoc and not interested in peace.

"It is now time for the US to put on the table an attack on Iranian oil refineries if they continue their provocations or increase nuclear enrichment," Graham said in a tweet.

There was no immediate reaction from Sen. Bob Menendez (D-NJ), the top Democrat on the Senate Foreign Relations Committee.

Trump has said there are five potential candidates to replace Bolton, including the top US envoy to Iran, Brian Hook, who has led the maximum pressure campaign for over a year.

Hook didn't respond to a request for comment.

"The United States has limited options for non-escalatory intervention," said Kirsten Fontenrose, a former director for the Persian Gulf region in the Trump National Security Council. EFE-EPA

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