Tue | Oct 22, 2019

Energy prices spike after Saudi oil attack

Published:Monday | September 16, 2019 | 9:34 AM
This image provided on Sunday, September 15, 2019, by the U.S. government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at Saudi Aramco's Abaqaiq oil processing facility in Buqyaq, Saudi Arabia. (U.S. government/Digital Globe via AP)

DUBAI, United Arab Emirates (AP) — 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 fuelling 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.

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.

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