Some analysis here from CNN correspondents on the ground in Saudi Arabia and Iran:
Saturday's attacks strike "at the heart of the country's lifeblood and the basis of its economy," says CNN's International Diplomatic Editor, Nic Robertson, from Riyadh.
The 19 strikes at two facilities were the result of "very clear and careful precision and planning," he adds
Saudi Arabia is now expected to offset the impact of these attacks through their reserve oil capacity (200 million barrels) in Europe, China and Japan.
Meanwhile in Tehran, CNN's Senior International Correspondent, Nick Paton Walsh, points out that Saudi Arabia haven't yet come out to blame anyone.
And as for the Houthi rebel's claim of using drones, he adds: "They'd have to have flown across hundreds of miles of Saudi Arabia through US-supplied air defenses to hit those refineries."
Even after many months of the US and allies Saudi Arabia, and Iran, "winding each other up," we've seen "nothing on the scale of these attacks," says Paton Walsh.
"The real fear is we're in such uncharted territory, with such a perceived vacuum in the security establishment within the White House, we simply don't know what may come next," he adds.
Some analysis here from CNN correspondents on the ground in Saudi Arabia and Iran:
Saturday's attacks strike "at the heart of the country's lifeblood and the basis of its economy," says CNN's International Diplomatic Editor, Nic Robertson, from Riyadh.
The 19 strikes at two facilities were the result of "very clear and careful precision and planning," he adds
Saudi Arabia is now expected to offset the impact of these attacks through their reserve oil capacity (200 million barrels) in Europe, China and Japan.
Meanwhile in Tehran, CNN's Senior International Correspondent, Nick Paton Walsh, points out that Saudi Arabia haven't yet come out to blame anyone.
And as for the Houthi rebel's claim of using drones, he adds: "They'd have to have flown across hundreds of miles of Saudi Arabia through US-supplied air defenses to hit those refineries."
Even after many months of the US and allies Saudi Arabia, and Iran, "winding each other up," we've seen "nothing on the scale of these attacks," says Paton Walsh.
"The real fear is we're in such uncharted territory, with such a perceived vacuum in the security establishment within the White House, we simply don't know what may come next," he adds.
Oil prices spiked shortly after trading began Monday after an attack on Saudi Arabia's oil facilities Saturday that knocked out more than five percent of global oil supply and halted output of more than half of Saudi Arabia's daily exports.
Brent crude futures jumped to nearly 20 percent, the biggest intraday percentage gain since the Gulf War in 1991, to a session high of $71.95 a barrel at the opening, while U.S. crude futures surged more than 15 percent to a session high of $63.34 a barrel. Both benchmarks rose to the highest since May.
State oil giant Saudi Aramco said the attack cut output by 5.7 million barrels of crude oil per day. It gave no timeline for output resumption, only saying that work to restore production is underway. It said on Saturday it would provide an update in 48 hours.
As the news of the attacks broke, Secretary of State Mike Pompeo reassured that the United States would work with its partners and allies to make sure that energy markets remain well supplied.
Late Sunday, President Donald Trump also tried to assuage the fears saying he authorized the release of oil from the U.S. Strategic Petroleum Reserve (SPR), if needed, in a quantity to be determined to keep the market well-supplied in the aftermath of the attacks.
U.S. Energy Secretary Rick Perry also said on Monday oil market is resilient and will react positively to the attack on Saudi Arabia's oil industry.
But the attacks have added to anxiety about the stability of the world's oil reserves.
Bloomberg reported Monday that the disruption caused by Saturday's attacks surpasses the loss of Kuwaiti and Iraqi petroleum output in August 1990, when Saddam Hussein invaded his neighbor. It said it also exceeds the loss of Iranian oil production as a result of 1979 during the Islamic Revolution.
"Saudi Arabia has been a very reliable supplier of oil in the world," Jim Burkhard, who heads crude oil research for IHS Markit, told the Associated Press. This attack is "adding a geopolitical premium back into the price of oil,” he said, meaning prices would rise because of worries about more unrest and possible future attacks jeopardizing global oil supplies.
On Saturday, Yemen's Iran-backed Houthi rebels took responsibility for the attacks on Saudi oil infrastructure, saying their drones struck Saudi oil-processing facilities at Abqaiq and Khurais.
However, the U.S. pointed the finger at Iran, another major oil producer and geopolitical player, with Pompeo saying there was “no evidence the attacks came from Yemen.” Iran has denied any responsibility.
While there has been no immediate threat of a military response from Saudi Arabia or the U.S., the uncertainty around any possible retaliation is roiling the markets.
President Trump on Sunday that the U.S. is “locked and loaded” once it’s clear who is behind the attacks.
Sept. 15, 201902:08
Experts agree that the long-term effect on oil prices will depend on how fast Saudi Arabia restores production.
"The surge in prices is the natural knee jerk reaction, but the path ahead and ability to sustain at elevated levels remains dependent on the duration of the outage," Michael Tran, managing director of energy strategy at RBC Capital Markets in New York, told Reuters.
Goldman Sachs senior commodity strategist Damien Courvalin told oilprice.com he expects Brent oil prices to rally above $75 a barrel should the current outage last for more than six weeks, a level at which he believes a Strategic Petroleum Reserve release would likely be implemented, large enough to balance such a deficit for several months and cap prices at such levels.
An attack on Saudi Arabia is more important than anywhere else because the rest of the world’s ability to make up for any disruption is limited and they are the largest exporter of crude globally, said Bernadette Johnson with energy analytics company Enverus in an emailed comment to NBC News.
Johnson said the vulnerability of Saudi Arabia oil production to such an attack was “surprising” and the size of disruption is “huge compared to other supply outages we’ve seen,” but the real question is how long it will last.
“If they are able to bring the production back online by Monday, the world crude stocks overhang can easily absorb the loss and price may only jump for a couple days,” Johnson said. “If the supply is out much longer than Monday, we should expect to see a big jump in price until the fields return.”
When it comes to stocks of crude oil however, Johnson said as recently as Thursday, the International Energy Agency (IEA) was warning about the likelihood of continued stock builds (as a result of global oversupply) above the already high levels.
“The world has reserves that could easily handle weeks or a few months of outages from Saudi Arabia,” she said.
In response to the attacks on Saturday, IEA said they were in contact with the Saudi authorities as well as major producer and consumer nations, but reassured that markets were well supplied with “ample commercial stocks.”
Still, Johnson said the attacks were a “double blow” — not was a significant supply of oil lost, but it happened in Saudi Arabia, where the world would normally look for spare capacity to fill the gap.
Dubai, United Arab Emirates — 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. President Trump has warned the U.S. is "locked and loaded" to respond as two of his cabinet members blame the attack on Iran.
U.S. officials offered satellite images of the damage at the heart of the kingdom's crucial Abqaiq oil processing plant and a key oil field, alleging the pattern of destruction suggested the attack on Saturday came from either Iraq or Iran — rather than Yemen, as claimed by Iranian-backed Houthi rebels there.
Iran for its part called the U.S. allegations "maximum lies" and denied any role in the attack on the Saudi facilities.
Actions on any side could break into the open a twilight war that's been raging just below the surface of the wider Persian Gulf in recent months.
Already, there have been mysterious attacks on oil tankers that America blames on Tehran, at least one suspected Israeli strike on Shiite forces in Iraq, and Iran has shot down a U.S. military surveillance drone.
Crude spikes, then settles up 10%
Benchmark Brent crude gained nearly 20% in the first moments of trading Monday before settling down to 10% higher as trading continued. A barrel of Brent traded up $6 to $66.28.
U.S. benchmark West Texas crude was up around 9%. U.S. gasoline and heating oil similarly were up over 8% and 7% respectively before markets opened in New York.
Smoke is seen following a fire at Aramco facility in the eastern city of Abqaiq, Saudi Arabia, September 14, 2019.
REUTERS
Saturday's attack halted production of 5.7 million barrels of crude a day, more than half of Saudi Arabia's global daily exports and more than 5% of the world's daily crude oil production. Most of that output goes to Asia.
At 5.7 million barrels of crude oil a day, the Saudi disruption would be the greatest on record for world markets, according to figures from the Paris-based International Energy Agency. It just edges out the 5.6 million-barrels-a-day disruption around the time of Iran's 1979 Islamic Revolution, according to the IEA.
Reaching into the reserves?
Saudi Arabia has pledged that its stockpiles would keep global markets supplied as it rushes to repair damage at the Abqaiq facility and its Khurais oil field.
The Trump administration, meanwhile, said it was prepared to tap the U.S. Strategic Petroleum Reserve "if needed" to maintain a consistent supply and prevent a massive price hike. The Reserve is a stockpile of about 630 million barrels of crude, maintained by the Department of Energy, to deploy precisely for the purpose of mitigating fluctuations in the global oil supply.
U.S. may tap its oil reserves after drone strikes on Saudi oil facilities
A statement from DOE Press Secretary Shaylyn Hynes, written just hours after the attack on the Saudi facility, said the agency "stands ready to deploy resources from the Strategic Petroleum Oil Reserves (SPRO) if necessary to offset any disruptions to oil markets as a result of this act of aggression."
Mr. Trump said in a series of tweets that he had also, "informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States," to try to increase domestic U.S. production.
"Locked and loaded"
Mr. Trump said the U.S. had reason to believe it knows who was behind the attack — his secretary of state had blamed Iran the previous day. He assured his Twitter followers that "we are ... locked and loaded" depending on verification and were waiting to hear from the Saudis as to who they believe was behind the attack and "under what terms we would proceed!"
Energy Secretary Rick Perry also put the blame squarely on Iran Monday. Perry said in a tweet that the global oil market was "resilient and will respond positively" to measures by the U.S. to prevent a long-term price rise due to what he called "Iran's attack on the global economy and energy markets."
"The United States wholeheartedly condemns Iran's attack on the Kingdom of Saudi Arabia. We call on other nations to do the same," Perry said at a conference of the International Atomic Energy Agency in Vienna, Austria. "This behavior is unacceptable and they must be held responsible."
The Department of @ENERGY stands ready to release oil from the SPR deemed sufficient to offset Iran’s attack on the global economy and energy markets. The market is resilient and will respond positively! https://t.co/gyh2YSzasC
But there was less certainty from London, where British Foreign Secretary Dominic Raab called the attack "a wanton violation of international law," but said it was still "not entirely clear" who was to blame.
"I want to have a very clear picture, which we will be having shortly," Raab said. "It's a very serious, an outrageous act, and we need to have a clear and as united as possible international response to it."
The Houthi rebels in Yemen reiterated their claim of responsibility, meanwhile, and warned Monday that they could attack Saudi infrastructure again "at any moment."
"We assure the Saudi regime that our long military arm can reach wherever we want, at the time we set," a spokesman for the Houthi military command said in a message sent via social media. The message demanded the Saudi government halt its "aggression and siege on Yemen."
Mr. Trump's tweets followed a National Security Council meeting at the White House that included Vice President Mike Pence, Secretary of State Mike Pompeo and Defense Secretary Mark Esper.
A U.S. official said all options, including a military response, were on the table, but said no decisions had been made Sunday. The official spoke on condition of anonymity to discuss the internal deliberations.
Getty
Mr. Trump's "locked and loaded" comment mirrors similar remarks he made following Iran shooting down a U.S. military surveillance drone in June. However, the president said he pulled back from retaliating against Iran at the last minute.
U.S. officials also offered highly detailed satellite photos of the Saudi sites that show damage suggesting the attack came from the north, where Iran or Iraq are, rather than from Yemen to the south. Iraq's prime minister has denied the attack came from his country, where Iranian-backed Shiite rebels operate.
Iranian Foreign Ministry spokesman Abbas Mousavi on Sunday dismissed the U.S. allegations as "blind and futile comments."
"The Americans adopted the 'maximum pressure' policy against Iran, which, due to its failure, is leaning toward 'maximum lies,'" Mousavi said.
The U.S. satellite photos appear to show the attack on Abqaiq may have struck the most-sensitive part of the facility, its stabilization area.
This image provided on September 15, 2019, by the U.S. government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at Saudi Aramco's Kuirais oil field in Buqyaq, Saudi Arabia.
AP/DigitalGlobe
The Washington-based Center for Strategic and International Studies has said the area includes "storage tanks and processing and compressor trains — which greatly increases the likelihood of a strike successfully disrupting or destroying its operations."
Stabilization means processing so-called sour crude oil into sweet crude. That allows it to be transported onto transshipment points on the Persian Gulf and the Red Sea, or to refineries for local production.
When Hong Kong’s ongoing mass demonstrations began on June 9, the streets were flooded by a peaceful sea of protesters, the majority of whom were dressed in white.
But in the 15 weeks since that day, the movement has transformed into something altogether bigger -- and more violent.
It's no longer about the withdrawal of an extradition bill, protesters are now calling for the "Liberation of Hong Kong."
Although today's demonstration started peacefully, it quickly turned into an aggressive face-off between police and protesters.
Earlier, black-clad protesters threw objects and smashed glass, tore bricks from the pavement and tossed petrol bombs. Riot police responded by firing water cannons with blue water and tear gas.
Now, the streets are left in disarray. Harcourt Road -- the street that leads to the city's Legislative Council -- is dyed blue and is marred with graffiti. There’s the faint smell of tear gas in the air.
With both protesters and police moving east, it seems likely that another face-off is on the cards.
