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

 

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

City of Lacombe installs new skating rink at LMC

Lacombe residents can now skate among the LMC Christmas lights

Cops, Pops and Pizza in Lacombe raises $1,700 for Special Olympics Alberta

Annual event part of national Law Enforcement Torch Run campaign

Blackfalds RCMP officer’s firearm discharged in struggle

Red Deer and Sylvan Lake RCMP assist after police vehicle stolen

Lacombe Ram Zach Schwab wins City Offensive Player of the Year

Wide receiver hoping to play football at the next level

WATCH: CP Holiday Train supports Lacombe Food Bank

Madeline Merlo and JUNO Award nominee Scott Helman both performed

Five things of note from Trudeau’s mandate letters to his ministers

Some marching orders come from the Liberal Party’s campaign, while others are new additions

Scheer’s resignation tips party into internal war over school tuition payments

The Conservatives have a Toronto convention already scheduled for April

AHS: Albertans reminded to be food safe this holiday season

Important to wash your hands often and prepare foods properly to reduce risk of food-borne illness

Two adults, two youths from Maskwacis charged in ATV, gun theft

Wetaskiwin RCMP Investigate Break, Enter & Theft and Weapons Offences - Arrests

Indigenous mother wins $20,000 racial discrimination case against Vancouver police

Vancouver Police Board ordered to pay $20,000 and create Indigenous-sensitivity training

‘He was good for the West:’ Sadness, surprise in Saskatchewan over Scheer

Saskatchewan Premier Scott Moe and his predecessor, Brad Wall, both thanked Andrew Scheer

Johnson claims Brexit mandate with new conservative majority

Conservative Party wins 365 seats in the House of Commons

Couple who bought $120k banana duct-taped to wall say artwork will be ‘iconic’

Pair compared it to Warhol’s ‘Campbell’s Soup Cans,’ which was initially ‘met with mockery’

Most Read