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.
Oil prices spike as Trump administration blames Iran for attack on Saudi Arabia
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.Anti-U.S. billboards in Iraq a message from IranAlready, 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%. 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 695 million barrels of crude, maintained by the Department of Energy, to deploy precisely for the purpose of mitigating fluctuations in the global oil supply. The Department of Energy says the reserve is sufficient to cover “the equivalent of 143 days of import protection.”
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 … 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. On Monday, Mr. Trump insisted in a tweet “We don’t need Middle Eastern Oil & Gas.” He credited himself in the same tweet for making the U.S. the “Number One Energy Producer in the World.”A fuel price expert told CBS News transportation correspondent Kris Van Cleave on Monday, however, that the attack on the Saudi facility was likely to drive the average cost of a gallon of gas in the U.S. up 10 to 25 cents. He called that level of price rise “annoying, but not likely to change consumer behavior.”Van Cleave said how long the spike in gas prices will last depends on how fast the Saudis are able to restore production. As of Monday, the kingdom had not said how long it would take to repair all the damage, but suggested some of the production capacity could be restored this week.If it persists, the expert said we could there could be more significant increases in the weeks to come.”Locked and loaded”Mr. Trump said over the weekend that 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!”