On Sept. 14, a series of drone attacks halted about half of the world’s largest supply of oil’s production, dealing a critical blow to the world’s supply of oil produced by state-owned Saudi Aramco.
Aramco is hoping to bridge the potential supply gap by drawing on reserves, but restoring the plant to its original output levels could take weeks, and so there is some international concern about the implications of a possible shortage.
Trump has responded with responses ranging from being “locked and loaded” and ready for confrontation with Iran
Oil prices surged in response on Monday after production of an estimated more than 5.7 million barrels of crude oil per day were halted. However, after an initial spike, crude prices were soon regulated once traders appraised the potential long-term effects. Saudi Arabia’s oil production accounts for about 12% of the world’s total output annually, and 5% daily. Aramco in particular produces about 9.5 million barrels of oil per day.
The Yemeni Houthi rebels group, supported by Iran, claimed responsibility for the attack on Saudi Arabia’s largest oil processing plant. Meanwhile, the US insists that Iran is actually responsible. A US official claims they have evidence, saying that 19 points of impact from projectiles appear to have arrived from a west-north-west direction, as opposed to the Houthi-controlled territory, which lies south-west of the facilities, according to Reuters.
“The only option for the Saudi government is to stop attacking us,” Houthi military spokesman Yahia Sarie said.
While the US accuses Iran of being behind the attack, Iran itself denies any involvement or responsibility: “The allegations are condemned as unacceptable and entirely baseless,” Foreign Ministry spokesman Abbas Mousavi said in a public televised statement.
Saudi Arabia’s oil production accounts for about 12% of the world’s total output annually, and 5% daily. Aramco in particular produces about 9.5 million barrels of oil per day.
Despite the increasing tensions between Iran and the US, Iran recently seized another oil tanker through the Strait of Hormuz on Sept. 17th, claiming it smuggled oil to the United Arab Emirates. Iran’s oil prices are some of the cheapest in the world, and this is likely a part of its efforts to crack down on smuggling in the region.
Since the initial attack, Trump has responded with responses ranging from being “locked and loaded” and ready for confrontation with Iran, to that he would “like to avoid” a military crisis with Iran. Following the accusations, Khamenei has stated that “there will be no talks with the US at any level.”
As Saudi’s Aramco struggles to recover from the drone-based attack, the world watches to see how this will affect oil prices and availability. Photo from Aljazeera.