Energy prices spike after Saudi oil attack as U.S. blames Iran

Weekend attack stopped production of 5.7 million barrels of crude oil a day

FILE - In this Saturday, Sept. 14, 2019 file photo, made from a video broadcast on the Saudi-owned Al-Arabiya satellite news channel, smoke from a fire at the Abqaiq oil processing facility fills the skyline, in Buqyaq, Saudi Arabia. (Al-Arabiya via AP, File)

Global energy prices spiked Monday by a percentage unseen since the 1991 Gulf War after a weekend attack on key oil facilities in Saudi Arabia caused the worst disruption to world supplies on record, further fueling heightened tensions between Iran and the U.S.

American officials released 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 Saturday’s attack came from either Iraq or Iran — rather than Yemen, as claimed by Iranian-backed Houthi rebels there. A Saudi military spokesman later made the same accusation, alleging “Iranian weapons” had been used in the assault.

Iran rejected the allegations, with a government spokesman saying now there was “absolutely no chance” of a hoped-for meeting between Iranian President Hassan Rouhani and President Donald Trump at the U.N. General Assembly next week.

For his part, Trump sent mixed signals, saying his “locked and loaded” government waited for Saudi confirmation of Iran being behind the attack while later tweeting that the U.S. didn’t need Mideast oil, “but will help our Allies!”

The tensions have led to fears that action on any side could rapidly escalate a confrontation that’s been raging just below the surface in the wider Persian Gulf in recent months. There already have been mysterious attacks on oil tankers that Washington blames on Tehran, at least one suspected Israeli strike on Shiite forces in Iraq, and the downing of a U.S. military surveillance drone by Iran.

Those tensions have increased ever since Trump pulled the U.S. out of Iran’s 2015 agreement with world powers that curtailed its nuclear activities and the U.S. re-imposed sanctions on the country that sent its economy into freefall.

Benchmark Brent crude gained nearly 20% in the first moments of trading Monday before settling down to over 10% higher as trading continued. A barrel of Brent traded up $6.45 to $66.67.

That spike represented the biggest percentage value jump in Brent crude since the run-up to the 1991 Gulf War that saw a U.S.-led coalition expel Iraqi dictator Saddam Hussein’s forces from Kuwait.

U.S. benchmark West Texas crude was up around 10%. U.S. gasoline and heating oil similarly were up.

The 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.

READ MORE: Iran to raise uranium enrichment beyond nuclear deal limits

Though the world’s overall energy demands in the past were smaller, the Saudi outage has sparked concern among analysts of prices pushing to $80 a barrel and beyond. Publicly traded airlines, whose major costs include jet fuel, suffered globally. That could in turn push up prices on everything from travel to a gallon of gas at the pump.

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. However, Saudi Aramco has not responded publicly to questions about its facilities.

The Associated Press

Like us on Facebook and follow us on Twitter

Get local stories you won't find anywhere else right to your inbox.
Sign up here

 

In this Saturday, Sept. 15, 2019, photo released by Saudi Press Agency, SPA, Saudi Energy Minister Prince Abdulaziz bin Salman, center, visits the Saudi Aramco plants one day after the attacks in Abqaiq, Saudi Arabia. (Saudi Press Agency via AP)

Just Posted

Vancouver Island’s current COVID-19 case count officially hits zero

Of the 130 recorded Island Health cases, five people have died, 125 recovered

Mill Bay students holding out hope for a more traditional graduation

Disappointment likely looms, according to a SD79 report

VIU leadership conference online for month of June

Students and community members can sign up for the speaker series and/or the excursion series

Cowichan grads to have creative graduation ceremonies

All district secondary schools are all at different stages in their planning.

MAP: Dr. Henry reveals which B.C. regions have seen most COVID-19 cases

B.C. health officials release a first look at how the novel coronavirus has reached all corners of the province

List of cancelled Cowichan Valley community events

An ongoing list of events that have been cancelled in the Cowichan Valley due to COVID-19

‘I’m pissed, I’m outraged’: Federal minister calls out police violence against Indigenous people

Indigenous Minister Marc Miller spoke on recent incidents, including fatal shooting of a B.C. woman

Plan in place for BC Ferries to start increasing service levels

Ferry corporation reaches temporary service level agreement with province

B.C. starts to see employment return under COVID-19 rules

Jobless rate for young people still over 20% in May

Alert Bay resident carves tribute to his community kicking COVID-19’s butt

‘Our little village crushed the curve with love and commitment’

End of an Era: Tofino hair studio closes shop

“We were getting excited to start ramping up and then all of sudden we had to close our doors.”

Kelowna Mountie on desk duty following ‘aggressive’ arrest

The officer involved in an arrest that took place on May 30 in Kelowna has been placed on administrative duties

Protests shift to memorializing George Floyd amid push for change

‘There is something better on the other side of this,’ says Atlanta Mayor Keisha Lance Bottom

Most Read