Saudi oil output to recover in two or three weeks after attack: sources

A satellite image showing damage to oil/gas Saudi Aramco infrastructure at Abqaiq, in Saudi Arabia in this handout picture released by the U.S Government September 15, 2019. U.S. Government/DigitalGlobe/Handout via REUTERS

By Alex Lawler and Parisa Hafezi

LONDON/DUBAI (Reuters) – Saudi Arabia sought to calm markets on Tuesday after an attack on its oil facilities, with sources in the kingdom saying output was recovering much more quickly than initially forecast and could be fully back in two or three weeks.

International oil companies, fellow members of the OPEC oil cartel and global energy policymakers had heard no updates on the impact of the weekend attack from the Saudis for 48 hours, according to sources with knowledge of the situation.

And on Monday, sources briefed on state oil giant Aramco’s operations had said it could take months for output to recover.

The attack knocked out half of Saudi Arabia’s oil production, or 5% of global output, sending prices soaring when trading resumed on Monday. So the new prediction of a quick return to normal output sent prices down sharply on Tuesday.

The kingdom is close to restoring 70% of the 5.7 million barrels per day lost due to the attack, a top Saudi official said, adding that Aramco’s output would be fully back online in the next two to three weeks.

The Saudi energy minister will hold a news conference on Tuesday at 1715 GMT, giving what would be the first official update since Aramco announced on Sunday that attacks on its plants in Abqaiq and Khurais had knocked out 5.7 million barrels per day.

While the Houthi group, which is fighting a Saudi-led coalition in Yemen, was quick to claim responsibility for the attack, U.S. President Donald Trump blamed Iran. That accusation prompted Iran’s supreme leader on Tuesday to rule out talks with Washington.

NUCLEAR ACCORD

Trump said on Monday that it looked like Iran was behind the strike at the heart of the Saudi oil industry, but stressed he did not want to go to war. Iran denied it was to blame.

“Iranian officials, at any level, will never talk to American officials … this is part of their policy to put pressure on Iran,” Iranian state TV quoted Ayatollah Ali Khamenei as saying.

He said talks could only take place if the United States returned to a nuclear accord between Iran and the West that Trump abandoned last year.

U.S.-Iran relations deteriorated after Trump quit the accord and reimposed sanctions over Tehran’s nuclear and ballistic programs. He also wants Iran to stop supporting regional proxies, including the Houthis.

But a day after warning that the United States was “locked and loaded” to respond to the incident, Trump dialed down his rhetoric, saying on Monday there was “no rush” to do so and that Washington was coordinating with Gulf Arab and European states.

“I’m not looking at options right now. We want to find definitively who did this.”

Britain and Germany agreed they needed to work with international partners to form a collective response and de-escalate tensions as efforts continued to establish exactly what happened, Prime Minister Boris Johnson’s spokesman said.

German Chancellor Angela Merkel said the Iran nuclear pact, which European parties are trying to salvage, is one building block “we need to get back to”.

Saudi Arabia, which has supported tougher U.S. sanctions on Iran, said an initial investigation showed the strikes were carried out with Iranian weapons.

INVESTIGATION

Riyadh asked international experts to join its investigation, which indicates the attack did not come from Yemen, the foreign ministry said. U.S. officials say they believe it came from the opposite direction, possibly from Iran.

Iranian President Hassan Rouhani said Yemenis had launched the strikes in retaliation for attacks by a Saudi-led coalition that has been battling the Houthis for four years. Riyadh says Tehran arms the group, which has fired missiles and drones on Saudi cities, a charge both deny.

King Salman, heading a cabinet meeting on Monday, said Riyadh would handle the consequences of “cowardly attacks” that target vital Saudi installations, world crude supplies and global economic stability. The cabinet urged the world to confront those threats “regardless of their origin”.

The assault damaged the world’s biggest crude oil processing plant, triggering the largest jump in oil prices in decades. It was the worst such attack on regional oil facilities since Saddam Hussein torched Kuwait’s oil wells during the 1990-91 Gulf war.

However, dollar-denominated bonds issued by the Saudi government and Aramco rebounded on Tuesday, in a sign investors’ concern may be abating.

Trump said he was sending Secretary of State Mike Pompeo to Saudi Arabia soon, but he had not made any commitments to protect the Saudis. “That was an attack on Saudi Arabia, and that wasn’t an attack on us. But we would certainly help them.”

(Reporting by Parisa Hafezi and Steve Holland; Additional reporting by Reuters teams in London, Dubai, Riyadh, Cairo, Berlin, Paris, Singapore and New Delhi; Writing by Ghaida Ghantous; Editing by Giles Elgood and Andrew Cawthorne)

Saudi-led air strike kills 12 civilians, including seven children: medics

Morgue workers sort plastic bags containing bodies of an airstrike victims in Hodeida, Yemen April 2, 2018. REUTERS/Abduljabbar Zeyad

HODEIDAH, Yemen (Reuters) – An air strike by the Saudi-led coalition fighting in Yemen killed 12 civilians including seven children in the coastal city of Hodeidah on Monday, medics and a witness said.

Medics and a civilian who saw the wreckage said the air strike had destroyed a house in the al-Hali district, where displaced civilians from other provinces were settled.

The 12 victims were all from the same family, they said.

A spokesman for the Saudi-led coalition told Reuters: “We take this report very seriously and it will be fully investigated as all reports of this nature are – using an internationally approved, independent process. Whilst this is ongoing, it would be inappropriate to comment further.”

Hodeidah is home to the impoverished country’s biggest port from where most of the humanitarian aid reaches millions of civilians on the brink of famine. The operation of port, controlled by the Iran-aligned Houthis, was not affected by the air strike.

Saudi Arabia and the United Arab Emirates intervened in a civil war in Yemen in 2015 against the Houthis to restore the internationally recognised government of President Abd-Rabbu Mansour Hadi.

The alliance, which includes other Sunni Muslim states, has conducted thousands of air strikes targeting Houthi fighters and has often hit civilian areas, although it denies ever doing so intentionally.

The war has killed more than 10,000 people, displaced more than 2 million and driven the country – already the poorest on the Arabian Peninsula – to the verge of famine.

Last week the Houthis launched a flurry of missiles which Saudi Arabia said it had intercepted over Riyadh. Debris from the missiles fell on a home, killing one person.

Rights watchdog Human Rights Watch on Monday said the Houthi attack had violated the laws of war by indiscriminately targeting populated areas.

“The Houthis should immediately stop their indiscriminate missile attacks on populated areas of Saudi Arabia,” said Middle East director Sarah Leah Whitson.

“But just as unlawful coalition airstrikes don’t justify the Houthis’ indiscriminate attacks, the Saudis can’t use Houthi rockets to justify impeding life-saving goods for Yemen’s civilian population.”

When the Houthis fired missiles at Riyadh last November, the coalition responded by shutting Yemen’s airports and ports. The United Nations said that blockade raised the danger of mass starvation, and it was partially lifted.

(Reporting by Dubai newsroom; Editing by Alison Williams and Hugh Lawson)