Oil jumps as Saudi Arabia reports drone ‘terrorism’ against pipeline

DUBAI — Oil prices rose sharply Tuesday morning on reports of a drone attack at oil pumping stations in Saudi Arabia.

The incident is an “act of terrorism,” Saudi Energy Minister Khalid al-Falih said according to the state new agency SPA, describing attacks on two oil pumping stations near Riyadh for the country’s East-West pipeline carried out with bomb-laden drones.

Brent crude futures were up 1.3% at $71.14 a barrel, up 90 cents. U.S. West Texas Intermediate (WTI) crude futures were at $61.67 per barrel at 12:40 London time, up 1.03% for the session.

The fire has since been contained, according to the State Press Agency (SPA). Al-Falih asserted that oil production was not interrupted. State oil company Saudi Aramco said that its oil and gas supplies to Europe have not been affected.

“This act of terrorism and sabotage in addition to recent acts in the Arabian Gulf do not only target the Kingdom but also the security of world oil supplies and the global economy,” the SPA described al-Falih as saying.

No one has yet been directly accused of carrying out the attack, but a Houthi-run TV channel announced on Tuesday morning it had launched drone attacks on several Saudi installations. 

The channel Masirah TV,  citing a Houthi military official, reported that “seven drones carried out attacks on vital Saudi installations.”

Al-Falih, according to the SPA statement, said: “These attacks prove again that it is important for us to face terrorist entities, including the Houthi militias in Yemen that are backed by Iran.”

Saudi Arabia’s main stock index, the Tadawul, was down 1.5% at midday London time.

The exchange, which joined the MSCI emerging markets index this year as part of the country’s economic diversification agenda, dropped 2.7% on Monday on government reports that two Saudi oil tankers were among four vessels targeted in an unspecified “sabotage attack” off the United Arab Emirates coast of Fujeirah.

The series of incidents have ramped up tensions in the oil-rich region, where the reported sabotage attack on the commercial vessels that took place Sunday has spiked fears of possible conflict with regional rival Iran. 

While no one has been accused of the vessel attack, unnamed U.S. officials have suggested it could be Iran or one of its proxies, the Houthi rebels battling the Saudis in nearby Yemen. The Houthis have launched numerous drone and missile attacks against Saudi Arabia and claim to have carried out drone attacks against the UAE.

Iran has denied any involvement or knowledge of the attacks, and called for an independent investigation. Iran’s Foreign Minister Javad Zarif on Tuesday criticized “suspicious developments” in the region he said were aimed at creating tension.

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