US ready to release strategic oil reserve

Clay Curtis
September 17, 2019

The attack cut Saudi output by 5.7 million barrels a day, or around half.

Oil prices, which have remained low for months, could spike when markets open Monday as Saudi Arabia scrambles to fix damage to its energy infrastructure inflicted this weekend. Prices are still lower than what was in mid-July. The attack has disrupted their production of about 5.7 million barrels of crude oil per day, about half of the Kingdom's daily production of 9.8 million; to put another way: 5 percent of the world's supply.

A Chevron spokesman told Reuters the company sources crude from "multiple global suppliers", and it will "take the necessary actions to continue to meet the needs of the marketplace".

US President Donald Trump said on Sunday that the United States is "locked and loaded" for a potential response to the attack on Saudi Arabia's oil facilities, after a senior official in his administration said Iran was to blame.

Trump also announced on Sunday that he was authoring the release of oil from the Strategic Petroleum Reserve, if needed, "in a to-be-determined amount" sufficient to keep the markets well-supplied.

Saturday's explosions set off fires that engulfed the Abqaiq plant, the world's largest oil processing facility, and nearby Khurais, which hosts a massive oil field.

GARCIA-NAVARRO: What details do we know about these attacks on Saudi Arabia's oil facilities?

"Spikes in oil prices when the global economy is already flirting with the idea of recession (are) not ideal and, if repeated and sustained, could ultimately be what tips us over the edge", he added. Eroding fundamentals and the US-China trade war have dominating headlines and have been the primary catalyst behind the ongoing decline in crude oil prices.

US stock index futures dropped as global oil prices surged the most on record after a drone strike on a Saudi Arabian oil facility increased geopolitical risk concern.

The same official said the damage was caused by an armed drone attack.

The full effect of Saturday's attacks will become apparent today when the oil markets reopen.

"They are making decisions about whether and how to respond to what they see as a massive attack on their interests from the USA via sanctions by attacking US interests in turn, and those of USA partners they believe are responsible for USA policy", he said.

Houthi leader Muhammad al-Bukhaiti reiterated his group's claim of responsibility Sunday, telling The Associated Press it exploited "vulnerabilities" in Saudi air defenses to strike the targets.

That's according to a report Sunday night by the state-run KUNA news agency. It did not elaborate.

He tweeted: "Saudi Arabia oil supply was attacked".

Ric Ocasek dies 2019 at 75 - Obituary
Ric Ocasek of The Cars speaks on stage during the Rock & Roll Hall of Fame induction show in Cleveland, Ohio April 14, 2018. Ocasek started The Cars back in the '70s and made a name for themselves with their 1978 song " Just What I Needed ".

Saudi Arabia and Iran have been enemies for decades and are fighting a number of proxy wars, including in Yemen where Saudi forces have been fighting against the Houthis for four years.

Pompeo said Iran was behind almost 100 attacks on Saudi Arabia while leaders in Tehran "pretend to engage in diplomacy".

Another focus is on how Iran may respond.

If the Houthi rebels had deployed the drones from Yemen, they would have to have flown them hundreds of miles.

The allegations have, however, been dismissed by Iran.

That means oil prices would rise because of worries about more unrest hurting supply. But Mr Pompeo alleged on Twitter that Iran was behind what he called an "unprecedented attack on the world's energy supply".

Lebanon's Prime Minister Saad Hariri has condemned the drone attack on Saudi oil installations, describing it as an escalation that could widen conflicts in the region.

The International Energy Agency, or IEA, said on Saturday it was monitoring the situation in Saudi Arabia.

This image shows damage to the infrastructure at Saudi Aramco's Abaqaiq oil processing facility. "I think Secretary Pompeo's statements yesterday were absolutely right", Cheney said. And we've also had some comments this morning from Iran.

"The main point for Iran, in my opinion, is not necessarily to derail a meeting between Trump and Rouhani but to increase its leverage ahead of it", said Michael Horowitz, the head of intelligence at the Bahrain-based risk management firm Le Beck International. "Accepting our April '15 proposal to end war & begin talks may". "There is no evidence the attacks came from Yemen", he wrote on Twitter. Still, the attack has raised concerns about how long the kingdom will be able to maintain oil shipments and launched a scramble by refiners in leading Asian consumer countries to find alternatives.

It says Iraq would act "decisively" if anyone tried to use its territory to attack other countries.

Iran dismissed accusations by the United States that it was behind attacks on Saudi oil plants that risk disrupting global energy supplies and warned on Sunday that USA bases and aircraft carriers in the region were in range of its missiles. Those militias in recent weeks have been targeted themselves by mysterious airstrikes, with at least one believed to have been carried out by Israel.

Meanwhile, the USA secretary of state Mike Pompeo accused Tehran, the capital of Iran, of the attacks.

Saudi Arabia raced on Sunday to restart operations at oil plants hit by drone attacks which slashed its production by half, as Iran dismissed USA claims it was behind the assault.

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