Saudi drone attack: Where are we a week on and what happens next?


The attack could affect flows of both crude oil and refined products, as Saudi Arabia cuts deliveries to its own processing plants

Saudi drone attack: Where are we a week on and what happens next?

FILE PHOTO: Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, September 14, 2019.

Saudi Arabia suffered the single-biggest blow to its oil infrastructure in the country’s history when critical processing facilities were attacked. After a roller coaster week for the global oil market, what follows takes stock of everything that happened, where we are now, and what to watch in the weeks ahead.

At about 4 a.m. local time, oil processing facilities at Abqaiq and Khurais in Saudi Arabia were attacked by what was initially reported as a swarm of armed drones. The resulting fires were extinguished within hours, but the drama had only just begun.

There were at least 17 points of impact at Abqaiq, the world’s largest oil-processing facility, and more at Khurais.

Damage to the two sites reduced Saudi Arabia’s oil production by 5.7 million barrels a day, from about 9.8 million. As a single-impact event, it was probably the largest disruption to the oil market ever.

Abqaiq is the world’s largest oil-processing facility and handled about half Saudi Aramco’s production last year. It treats the crude from some of Saudi Arabia’s giant onshore fields, removing sulfur and volatile hydrocarbons that vaporize at atmospheric pressure to stabilize the crude before it’s pumped to refineries or export terminals. It was operating at a rate of about 4.5 million barrels a day before the attack.
Khurais is Saudi Arabia’s second largest oil field, with the capacity to pump about 1.45 million barrels a day of Arabian Light crude. It was running at a rate of 1.2 million barrels a day before the attack.

Most of Saudi Arabia’s lighter crude streams are produced at its onshore fields. Other deposits such as Manifa and Safaniyah, which don’t depend on Abqaiq for processing, produce the heavier grades. Photos of the aftermath of the attacks at Abqaiq, released by the U.S., show puncture marks on tanks that form part of the process to remove gas before the crude can pass to the stabilization towers.



Apportioning Blame

Within hours, Houthi rebels in Yemen claimed responsibility, as they did for strikes against Saudi Arabia’s East-West pipeline in May, and the Shaybah oil field in August. Saudi Arabia started a devastating bombing campaign in Yemen in 2015 — with some U.S. backing and weaponry — after the Houthis took control of the capital and other parts of the country. Despite thousands of civilian deaths, terrible human rights abuses on both sides, and a humanitarian catastrophe, the war has settled into an ugly stalemate. Yemen’s Houthi rebels have stepped up retaliatory attacks against Saudi Arabia and say they will target all countries involved in the conflict.

U.S. Secretary of State Mike Pompeo dismissed the Houthis’ claim, pinning the blame on Iran. “There is no evidence the attacks came from Yemen,” he tweeted. French Foreign Minister Jean-Yves Le Drian also dismissed the Houthi claims.

Iran has denied responsibility.

Twenty-five pilotless aircraft and cruise missiles of Iranian origin were used to attack the two sites, the Saudi Defense Ministry said at a press briefing four days after the incidents, where it displayed the remains of some of them. The range and accuracy of the weapons were beyond the capabilities of the Houthis, spokesman Turki al-Maliki said. The kingdom was still working “to determine the exact position of the launch point,” he added.

Repairs and Restoration

Saudi Arabia initially expected to re-start most lost oil output within days of the attack, but that early optimism was tempered after evaluation of the damage. Energy Minister Prince Abdulaziz bin Salman and Saudi Aramco CEO Amin Nasser still painted a positive picture of the kingdom’s ability to restore oil production and exports after the attack at a briefing on September 17.

Source From : business-standard.com

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