Saudi visit shows Putin’s deepening Middle East influence

By Olesya Astakhova and Stephen Kalin

RIYADH (Reuters) – President Vladimir Putin signaled Moscow’s growing Middle East clout on Monday by visiting Saudi Arabia for the first time in over a decade, buoyed by Russian military gains in Syria, strong ties with Riyadh’s regional rivals and energy cooperation.

Moscow accrued power in the Middle East in 2015 by sending troops to Syria, where it and Iran have been key backers of President Bashar al-Assad amid civil war, while the United States pulled back. Saudi Arabia sided with Syrian rebels.

On the eve of Putin’s trip, U.S. troops were abruptly retreating from northern Syria as Russian-backed government forces deployed deep inside Kurdish-held territory under a deal to help fend off a Turkish cross-border offensive.

Russia has also strengthened ties with both Sunni Muslim Saudi Arabia and Shi’ite Iran, which are locked in a decades-old contest for influence that veered towards open conflict after a recent spate of attacks on oil assets in the Gulf that Riyadh and Washington blame on Tehran. Iran denies the charges.

Tensions with Iran, which is locked in several proxy wars with Saudi Arabia, have risen to new highs after Washington last year quit a 2015 international nuclear accord with Tehran and re-imposed sanctions.

The Russian president, accompanied by his energy minister and head of Russia’s wealth fund, met King Salman at his palace along with de facto ruler Crown Prince Mohammed bin Salman, with whom Putin says he has friendly relations.

Deepening ties have seen non-OPEC Russia, once regarded as a rival in oil markets, join OPEC kingpin Saudi Arabia in forming an alliance known as OPEC+ to support crude prices by restraining output.

At a morning forum convening 300 Saudi and Russian CEOs, Saudi Energy Minister Prince Abdulaziz bin Salman said OPEC+ countries were showing high commitments to the deal, and his Russian counterpart said there were no talks underway to change it.

Ahead of the visit, Putin, who offered to provide Russian defense systems to the kingdom after Sept. 14 attacks on its oil facilities, said he could also play a positive role in easing tensions with Tehran given good ties with both sides.

Any progress on long-mulled Saudi plans to purchase the Russian S-400 surface-to-air missile systems would cause disquiet in Washington, which is sending 3,000 troops and additional air defense systems to Saudi Arabia.

U.S. President Donald Trump has resisted pressure to sanction Riyadh over human rights abuses, including the murder of journalist Jamal Khashoggi, calling that a “foolish” move that would only benefit competitors Russia and China.

OIL AND INVESTMENTS

Asked about concerns Riyadh was cozying up to Moscow, Saudi Minister of State for Foreign Affairs Adel al-Jubeir said he saw no contradiction.

“We don’t believe that having close ties with Russia has any negative impact on our relationship with the United States,” he told reporters on Sunday. “We believe that we can have strategic and strong ties with the United States while we develop our ties with Russia.”

Russian and Saudi flags lined Riyadh streets ahead of Putin’s one-day visit, which includes an evening performance by Russia’s Tchaikovsky Symphony Orchestra. Putin then travels to the United Arab Emirates.

In meetings with Saudi leaders, the Russian president will discuss the OPEC+ pact, which has seen production cut by 1.2 million barrels per day since January.

The two sides are expected to sign more than $2 billion of deals, including a joint investment by state oil giant Saudi Aramco and Russia’s RDIF sovereign wealth fund.

RDIF head Kirill Dmitriev said a number of Russian investors were interested in a planned initial public offering of Aramco. The oil major could sell 1-2% through a local listing its chairman said would be announced “very, very soon”, ahead of a potential international offering.

Energy Minister Alexander Novak said Russia’s Gazprom is interested in cooperating with Saudi firms on natural gas.

Moscow, the world’s largest wheat exporter, made some progress in accessing the Saudi and Middle Eastern markets when the kingdom agreed in August to relax specifications for wheat imports, opening the door to Black Sea imports.

RDIF and Saudi Arabia’s SALIC plan to sign an agreement to jointly search for investment projects in Russia’s agricultural sector, a source told Reuters.

(Additional reporting by Maher Chmaytelli and Dahlia Nehme in Dubai and Polina Devitt in Moscow; Writing by Stephen Kalin; Editing by Lincoln Feast, William Maclean)

U.S. to deploy large number of forces to Saudi Arabia

By Phil Stewart and Idrees Ali

WASHINGTON (Reuters) – The United States announced on Friday a new, large deployment of forces to Saudi Arabia to help bolster the kingdom’s defenses following the Sept. 14 attack on its oil facilities, which Washington and Riyadh have blamed on Iran.

The planned deployment, which was first reported by Reuters, will include fighter squadrons, one air expeditionary wing and air defense personnel, the Pentagon said.

The Pentagon said it was sending two additional Patriot batteries and one Terminal High Altitude Area Defense system (THAAD).

“Taken together with other deployments, this constitutes an additional 3,000 forces that have been extended or authorized within the last month,” Pentagon spokesman Jonathan Hoffman said in a statement.

It was unclear whether some of the newly announced troops might replace other American forces expected to depart the region in the coming weeks or months.

The Pentagon has yet to announce, for example, whether it will replace the aircraft carrier USS Abraham Lincoln and its strike group when it eventually wraps up its deployment to the Middle East.

The deployment is part of a series of what the United States has described as defensive moves following the attack on Saudi Arabia’s oil facilities last month, which rattled global energy markets and exposed major gaps in Saudi Arabia’s air defenses.

Iran has responded to previous U.S. troop deployments this year with apprehension. It denies responsibility for the attack on Saudi Arabia as well as attacks on oil tankers earlier this year.

(Reporting by Phil Stewart and Idrees Ali; Editing by Chris Reese and Tom Brown)

Exclusive: In Saudi Arabia, criticism of Crown Prince grows after attack

By Reuters staff reporters

(Reuters) – Some members of Saudi Arabia’s ruling family and business elite have expressed frustration with the leadership of Crown Prince Mohammed bin Salman following the largest-ever attack on the kingdom’s oil infrastructure last month.

It has sparked concern among several prominent branches of the ruling Al Saud family, which numbers around 10,000 members, about the crown prince’s ability to defend and lead the world’s largest oil exporter, according to a senior foreign diplomat and five sources with ties to the royals and business elite. All spoke on condition of anonymity.

The attack has also fanned discontent among some in elite circles who believe the crown prince, known in the West by the initials MbS, has sought too tight a grip on power, the sources said. Some of these people said the event has also fueled criticism among those who believe he has pursued an overly aggressive stance towards Iran.

“There is a lot of resentment” about the crown prince’s leadership, said one of the sources, a member of the Saudi elite with royal connections. “How were they not able to detect the attack?”

This person added that some people in elite circles are saying they have “no confidence” in the crown prince, an assertion echoed by the four other sources and the senior diplomat.

The crown prince nonetheless has staunch supporters. A Saudi source within circles loyal to the crown prince said: “The latest events won’t affect him personally as a potential ruler because he is trying to stop the Iranian expansion in the region. This is a patriotic issue, and so he won’t be in danger, at least as long as the father lives.”

A second senior foreign diplomat said ordinary Saudis still want to unite behind MbS as a strong, decisive, dynamic leader.

The Saudi government media office did not respond to detailed questions from Reuters for this article.

The crown prince, during a television interview aired Sunday by U.S. broadcaster CBS, said that defending Saudi Arabia was difficult because of the kingdom’s large size and the scale of threats it faces. “It’s challenging to cover all of this fully,” he said. He also called for “strong and firm” global action to deter Iran but said he preferred a “peaceful solution” to a military one.

FUELING RESENTMENT

At stake is political stability in the world’s largest oil exporter, a key ally of the United States in the Middle East. The crown prince is officially next in line to the throne to his 83-year-old father, King Salman, and is de facto ruler of the country. He has vowed to transform the kingdom into a modern state.

The 34-year-old crown prince, who is popular among young Saudis, has received praise at home for easing social restrictions in the conservative Muslim kingdom, granting women more rights and pledging to diversify Saudi Arabia’s oil-dependent economy. But state control of the media and a crackdown on dissent in the kingdom make it difficult to gauge levels of genuine enthusiasm domestically.

The September 14 attack set ablaze two of state oil giant Saudi Aramco’s plants, initially knocking out half of the kingdom’s oil production — 5% of global oil output. Saudi Arabia has said Iran was responsible, an assessment that U.S. officials share. Iranian officials have denied involvement.

“The magnitude of these attacks is not lost on the population, nor is the fact that he (the crown prince) is the minister of defense and his brother is deputy defense minister, and yet arguably the country has suffered its largest attack ever and on the crown jewels,” said Neil Quilliam, a senior research fellow at Chatham House, a London-based international affairs think tank.

“There’s diminishing confidence in his ability to secure the country – and that’s a consequence of his policies,” said Quilliam, a specialist on Saudi Arabia and the Gulf. MbS oversees foreign, security and defense policy.

The attack has fueled resentment that has simmered since the crown prince came to power two years ago, sweeping aside rivals to the throne and arresting hundreds of the kingdom’s most prominent figures on corruption allegations.

MbS has seen his reputation overseas suffer from a costly war in Yemen against the Iran-aligned Houthi group that has killed tens of thousands of people and triggered a humanitarian crisis. He also came under international criticism over the murder a year ago of journalist Jamal Khashoggi in the kingdom’s Istanbul consulate, which the U.S. Central Intelligence Agency has said the crown prince ordered.

The crown prince, during the CBS interview, denied ordering the killing of Khashoggi but said he ultimately bears “full responsibility” as the kingdom’s de facto leader.

Khashoggi was murdered by agents of the Saudi government without authorization or permission, said Saudi Arabia’s minister of state for foreign affairs, Adel al-Jubeir, during a moderated discussion hosted by the Council on Foreign Relations think tank in New York on September 24.

CONSOLIDATE CONTROL

Some Saudi critics say MbS’s aggressive foreign policy towards Iran and involvement in the war in Yemen exposed the kingdom to attack, according to four of the sources with ties to the royals and business elite. They also express frustration that the crown prince was unable to prevent the attacks despite spending hundreds of billions of dollars on defense, according to the five sources and one of the senior diplomats.

Jubeir, the Saudi minister, in his recent remarks in New York, said the kingdom’s air defenses have stopped hundreds of ballistic missiles and dozens of drones coming into Saudi Arabia. He added that the failure to detect the September 14 attack was “being looked at,” but that “it’s very difficult to detect small objects that fly at three hundred feet of altitude.”

Some Saudi elite say the crown prince’s efforts to consolidate control have hurt the kingdom. One source close to government circles said MbS has installed officials who were generally less experienced than previously.

MbS ousted Mohammed bin Nayef as crown prince and interior minister two years ago. The former crown prince had nearly two decades of experience in senior roles in the ministry, which was responsible for domestic policing and intelligence. MbS named a 33-year-old cousin as a replacement, after placing key areas of intelligence and counter-terrorism under the royal court’s purview.

The crown prince also removed Prince Miteb bin Abdullah, who had overseen or effectively commanded the kingdom’s elite internal security force, the Saudi Arabian National Guard, since 1996. The prince was ultimately replaced at the end of last year by then-32-year-old Prince Abdullah bin Bandar bin Abdulaziz, who had been deputy governor of Mecca for less than two years and before that in private business.

The Saudi government media office did not immediately respond to a request for comment addressed to Prince Abdullah.

FAVORITE SON

Saudi insiders and Western diplomats say the family is unlikely to oppose MbS while the king remains alive, recognizing that the king is unlikely to turn against his favorite son. The monarch has delegated most responsibilities of rule to his son but still presides over weekly cabinet meetings and receives foreign dignitaries.

Regardless of the king’s future, the insiders and diplomats say, a challenge to MbS’s authority could be difficult given his hold on the internal security structure.

Some royals view 77-year-old Prince Ahmed bin Abdulaziz, King Salman’s only surviving full brother, as a possible alternative who would have support of family members, the security apparatus and some Western powers, said two of the five sources with ties to Saudi elite.

“They are all looking at Ahmed to see what he does. The family continues to think he is the only one who can save them,” said one prominent businessman.

There is no evidence Prince Ahmed is willing to play that role, according to Saudi watchers. Prince Ahmed has largely kept a low profile since returning to Riyadh in October 2018 after 2-1/2 months abroad. During the trip, he appeared to criticize the Saudi leadership while responding to protesters outside a London residence chanting for the downfall of the Al Saud dynasty.

Prince Ahmed was one of only three people on the Allegiance Council, made up of the ruling family’s senior members, who opposed MbS becoming crown prince in 2017, two Saudi sources said at the time.

Prince Ahmed couldn’t be reached for comment. One of the five sources with ties to Saudi elite said that Prince Ahmed’s position on whether he will challenge MbS is that he “will cross that bridge when we come to it.”

(Editing by Cassell Bryan-Low)

Saudi prince seeks to dodge blame for Khashoggi killing: U.N. expert

By Stephanie Nebehay

GENEVA (Reuters) – Saudi Arabia’s crown prince is trying to repair damage to his image done by Jamal Khashoggi’s murder by insisting “layers and layers” of hierarchy separated him from the Saudi agents who killed the journalist, the U.N. investigator told Reuters.

Mohammad bin Salman told CBS program “60 Minutes” that as de facto Saudi leader he ultimately bore “full responsibility” for the killing a year ago, but he denied ordering it. He made similar remarks to U.S. broadcaster PBS.

Asked how he did not know about the killing by Saudi officials, he told CBS it was impossible for him to know “what three million people working for the Saudi government do daily”.

In an interview with Reuters, Agnes Callamard, U.N. expert on summary executions, attributed his remarks to a “strategy of rehabilitation in the face of public outrage around the world”.

“He is creating a distance between himself, he is exonerating himself from direct criminal responsibility in the killing. He is creating layers, and layers and layers of actors and institutions which are protecting him from his direct accountability for the killing.”

She spoke before joining Khashoggi’s family and friends in Istanbul on Wednesday to mark the murder’s first anniversary.

Khashoggi, a Washington Post columnist and critic of the crown prince, was murdered on Oct 2 at its consulate in Istanbul. His dismembered body has never been found. A global outcry ensued and led to U.S. Treasury sanctions on 17 Saudi individuals and a Senate resolution blaming Prince Mohammed.

Saudi officials have denied suspicions in the CIA that the crown prince, known as MbS, ordered the killing. Eleven people are on trial in Saudi Arabia, although Callmard has voiced concerns over a potential miscarriage of justice.

IMPUNITY

A report by Callamard in June found credible evidence warranting further investigation that the crown prince and other senior officials including key adviser Saud al-Qahtani are liable for the murder.

Callamard told Reuters the only way she could interpret his admission of state responsibility — as opposed to personal responsibility — was as “recognizing implicitly at least that the killing was a state killing.”

“To the extent the killing occurred under his watch, he represents the state, he is indeed quasi head of state,” she said.

Turning to the international implications, Callamard said that if countries around the world did not respond properly to Khashoggi’s killing, “it will open the gate to a sense of impunity for the killing of independent critical voices.”

Callamard has called for states to widen sanctions to include the crown prince and his assets abroad unless he can prove he is not responsible.

Critics of the kingdom say his latest public comments appear part of a public relations campaign ahead of Riyadh’s hosting of the G20 next year, its IPO of state oil giant Saudi Aramco and a foreign investment push to diversify the economy away from oil.

Reacting to Prince Mohammed’s description of the killing as a “mistake”, Callamard countered that a killing that implicated “a consulate, requires preparation and planning and ultimately premeditation for 24 hours, is not a mistake.”

She called for “a transparent investigation into the chain of command” around the killing and demanded the prince apologize to Khashoggi’s family and fiancee.

(Reporting by Stephanie Nebehay, Editing by William Maclean)

Drones, sanctions, contamination: supply surprises leave oil unfazed

By Ahmad Ghaddar and Noah Browning

LONDON (Reuters) – They should have started a bull run, but supply shocks that have rocked the oil industry this year have failed to deliver a sustained rise in crude prices.

Drone attacks crippled Saudi Aramco’s oil plants, U.S. oil sanctions knocked out exports from Iran and Venezuela, and massive contamination tainted Russian oil flows.

Yet, instead of sky-high prices, the market has been kept in check by a flood of oil from the U.S. fracking boom and worries about a global recession weighing on the demand outlook.

And there is unlikely to be a spike anytime soon, analysts and data indicate because high-tech industry understands better than ever just how replete their market is with oil.

“Between fears of peak oil demand, unlimited shale growth, a looming global recession and the possibility that millions of barrels of OPEC barrels (sanctioned or otherwise) could return to the market fairly quickly, there is no faith in the future,” said Amrita Sen, chief oil analyst at Energy Aspect.

The Organization of the Petroleum Exporting Countries, which includes Iran, Venezuela and its de facto leader Saudi Arabia, has continued to rein in supply this year but the group’s efforts have not delivered the hoped-for price surge.

Oil futures markets indicate that supply outages have not dealt a boost to prices as investors see the unexpected shocks to oil output will not massively dent overall supply.

SAUDI BOUNCE-BACK

The Sept. 14 attacks on Aramco sites knocked out around 5.7 million bpd of capacity from the world’s biggest oil exporter, nearly 6% of global oil supplies.

Despite the unprecedented damage, Saudi Arabia has swiftly restored its production capacity to 11.3 million barrels per day, just shy of its regular output, sources briefed on Aramco’s operations told Reuters.

Brent oil prices surged 15% in the wake of the attacks but have since lost most of their gains and are trading at around $62 a barrel.

 

While U.S. oil output continues to surge along with the productivity of existing wells, the increasingly sparse number of operating wells could eventually drag on output and provide a boost to prices.

“We think the outlook for U.S. supply growth is far too optimistic,” Mark Hume, portfolio manager at investment giant BlackRock’s Energy and Resources Income Trust.

“There’s a real chance of U.S. growth going to the downside and I think balances will be tighter than one might anticipate right now,” he added.

DATA TRANSPARENCY

Another aspect that has softened the impact of supply shocks on oil prices is the wide availability of data which gives investors a much clearer view on the operations of the market.

BP chief executive Bob Dudley said this week that the reaction to the Saudi attacks was “sensible”.

“It says something about the market – there’s instantaneous data on storage levels which didn’t exist in the past,” he said.

Technology firms increasingly offer real-time data pinpointing storage levels in oil tanks, detecting if a refinery unit is operating using heat cameras and tracking ships.

“The data availability is a bit of a game-changer,” said Norbert Ruecker, head of economics at Swiss bank Julius Baer. “This speeds up what financial markets are all about.”

(Reporting by Ahmad Ghaddar and Noah Browning; Additional reporting by Dmitry Zhdannikov and Ron Bousso in London and Jessica Resnick-Ault in New York; Editing by Edmund Blair)

Inside Saudi Arabia’s response to a raid on the heart of the oil kingdom

By Rania El Gamal, Stephen Kalin and Marwa Rashad

KHURAIS, Saudi Arabia(Reuters) – Saudi Arabia’s newly appointed energy minister was in London when he learned in the middle of the night of the largest-ever attack on the kingdom’s oil infrastructure.

Prince Abdulaziz bin Salman, a veteran oil official and senior member of the Al Saud ruling family, hurried back to the kingdom, flying by private jet to Aramco’s headquarters in Dhahran to assess the damage and manage the fallout from the attack on the world’s largest oil exporter, three sources close to the matter said. Officials at state-run oil company Saudi Aramco, meanwhile, gathered in what was referred to internally as the “emergency management room” at the company’s headquarters.

Interviews with at least a dozen Gulf and Western officials provide the most detailed account to date of the response by Saudi officials and state oil company Aramco to the most destructive strike on Saudi Arabia since it opened an offensive in Yemen more than four years ago. The attack knocked out more than half the kingdom’s oil production, or almost 6 percent of global oil output.

Saudi Arabia has said Iran was responsible, an assessment that U.S. officials share.

Iranian officials were unavailable to comment but Iran has denied involvement.

Yemen’s Houthi movement, an ally of Iran battling a Western-backed, Saudi-led coalition has claimed responsibility. But Gulf diplomats and regional officials say they are skeptical of the claim given the sophistication of the attacks.

The Saudi energy ministry declined to comment on its response to the attacks. The government communications office did not immediately respond to a request for comment.

The attacks place pressure on both U.S. President Donald Trump and Saudi Arabia’s day-to-day leader Crown Prince Mohammed bin Salman, who have worked closely together to contain Iran’s growing regional influence. Both nations have stressed the need for caution.

U.S. Secretary of State Mike Pompeo has described the attacks as “an act of war” against Saudi Arabia, though Trump says there are options short of war. Iran has warned that any U.S. or Saudi military strike against the country would bring “all-out war.”

(Graphics on ‘Strikes on Saudi oil disrupt global supply’ – https://tmsnrt.rs/302z0Hm)

MISSILES AND DRONES

Shortly after 3:30 a.m. local time on Saturday, 25 drones and low-flying missiles struck two of Saudi Arabia’s largest oil facilities located in the east of the kingdom, according to Saudi officials.

Amin Nasser, the chief executive of state-run Saudi Aramco, which owns the two plants, rushed to Aramco’s emergency-response room at the company’s headquarters in the oil-producing Eastern Province, where he was joined by other senior managers, according to several people briefed on the matter. There was a sense of shock at the scale of the damage, some of the people said.

By the time Aramco’s team was dealing with the fires at the first site in Khurais, where more than 200 people were at the time, strikes were still hitting the facility, according to the company. More than a hundred contractors were immediately evacuated.

A Saudi Aramco spokesman declined to comment on questions from Reuters about the company and the CEO’s response to the attacks.

Saudi officials believed Iran was responsible because the intensity of the attack was beyond the capability of the Houthi, but they wanted to gather evidence before going public with the claims, according to Gulf diplomats and regional officials.

Saudi officials also spoke to their allies, in some instances requesting assistance with experts to help with the investigation and help in strengthening air defenses. On Saturday, Prince Mohammed provided Trump an update by phone, according to a U.S. official. Trump offered “his support for Saudi Arabia’s self-defense,” according to the White House readout of the call.

U.S. officials also quickly came to believe that the attack did not come from Yemen and that Iran was responsible, according to U.S. officials who briefed reporters. The Houthi had not struck that distance before or in such a “precise and coordinated fashion,” said a senior administration official.

(Graphics on ‘Iran and Saudi Arabia are locked in a battle for regional supremacy, fighting proxy wars’ – https://tmsnrt.rs/31rShzd)

“PHOENIX FROM THE ASHES”

By midday Saturday in Saudi Arabia, Nasser and other senior company Aramco executives were headed to the damaged plants, first to Khurais and then to Abqaiq, one of the sources briefed on the matter said.

That night, Nasser was joined at Abqaiq, the world’s biggest oil processing facility, by Prince Abdulaziz and Aramco’s new chairman Yassir al-Rumayyan, according to sources and pictures released by the state news agency.

Aramco, which runs a variety of large projects in the kingdom, deployed more than 5,000 contractors and pulled employees from other projects to work around the clock to bring production back, according to Nasser’s public comments and one of the sources briefed on the matter.

Initial assessments were that the damage was significant and that bringing full production back online could take weeks or even months, said Saudi officials and industry sources who visited the sites or were briefed on the attacks.

Saudi oil officials were scrambling to produce a report on the extent damage for the kingdom’s top leadership, including King Salman, the energy minister’s father, according two of the sources briefed on the matter. But engineers needed 48 more hours for a final assessment, the people said.

Crude markets would begin trading again in two days and Saudi Arabia was under pressure to reassure buyers that oil supplies will not be disrupted.

“Imagine if this (production) didn’t come back on time the whole global security of supply is going to be impacted,” Nasser told reporters earlier this week. “We have a lot of projects in the kingdom… so we have all of the workforce that’s needed to rebuild, reconstruct and put it back,” he said.

By Tuesday, the kingdom had managed to restore full supplies to customers by drawing oil from their massive oil inventories. The company also announced production would return sooner than expected – by the end of the month. Aramco had emerged “like a phoenix from the ashes,” said Prince Abdulaziz in remarks to news media that night in Red Sea city of Jeddah.

The news restored some confidence, prompting a fall in oil prices that had jumped on Monday.

ATTACK EVIDENCE

The Saudis continued to analyze the attack debris. That included aerial weaponry that missed their targets and was recovered just to the north, according to U.S. officials.

The United States dispatched to Saudi Arabia forensic specialists to assist in the effort; France said it was also sending investigative experts.

On Wednesday, Saudi Arabian officials publicly accused Iran of involvement. At a news conference, a defense ministry official displayed drone and missile debris it said was undeniable evidence of Iranian aggression and identified the drones as Iranian Delta Wing unmanned aerial vehicles.

“The attack was launched from the north and unquestionably sponsored by Iran,” said the official, Colonel Turki al-Malki.

U.S. officials fingered southwest Iran as the staging ground, an assessment based at least in part on still-classified imagery showing Iran appearing to prepare an aerial strike, according to two U.S. officials.

On Thursday, the United States was considering sending anti-missile batteries, drones and more fighter jets to Saudi Arabia, U.S. officials said.

“Frankly there’s just not enough defense capability in the country, if you could be hit from multiple directions,” one U.S. official told Reuters.

It is possible the attacks were launched from more than one location, a Western security source said. “The exact launch location is important as it determines the response and there does have to be a response,” the person said.

On Friday, repair work to the oil plants was ongoing. At the Khurais facility, parts of the facility were visibly burnt and pipes melted. During a tour of the site organized by the company, Fahad Abdulkarim, general manager for Aramco’s southern area oil operations, told reporters that the company is shipping equipment from the United States and Europe to help repair the damage.

(Marwa Washad reporting from Jeddah. Additional reporting by Parisa Hafezi in Dubai, Guy Faulconbridge in London, and Roberta Rampton, Steve Holland and Phil Stewart in Washington.; Writing by Michael Georgy; Editing by Cassell Bryan-Low and Jason Szep)

Trump orders more Iran curbs, Saudi shows attack evidence

By Stephen Kalin and Parisa Hafezi

JEDDAH/DUBAI (Reuters) – U.S. President Donald Trump on Wednesday said he ordered a major increase in sanctions on Iran as Saudi Arabia displayed remnants of drones and missiles it said Tehran used in a crippling weekend attack on its oil facilities.

Trump gave no explanation in a brief Twitter posting announcing the order, but the initiative follows repeated U.S. assertions that the Islamic Republic was behind Saturday’s attack on the kingdom, a close U.S. ally.

“I have just instructed the Secretary of the Treasury to substantially increase sanctions on the country of Iran!,” he wrote.

Iran, however, again denied involvement in the Sept. 14 raids, which hit the world’s biggest crude processing facility and initially knocked out half of Saudi production.

“They want to impose maximum … pressure on Iran through slander,” Iran’s President Hassan Rouhani said.

“We don’t want conflict in the region … Who started the conflict?” he added, blaming Washington and its Gulf allies for the war in Yemen.

Yemen’s Houthi movement, an ally of Iran battling a Western-backed, Saudi-led coalition for more than four years, has claimed responsibility and said it used drones to assault state oil company Aramco’s sites.

However, the Saudi Defense Ministry held a news conference, displaying drone and missile debris it said was “undeniable” evidence of Iranian aggression. A total of 25 drones and missiles were used in the attacks launched from Iran not Yemen, the ministry spokesman added.

Saturday’s attack exposed the vulnerability of Saudi Arabia’s oil infrastructure and threw down a gauntlet to the United States, which wants to curb Tehran’s influence in the region.

Proof of Iranian responsibility could pressure Riyadh and Washington into a response, though both nations were stressing the need for caution.

Trump has said he does not want war and is coordinating with Gulf and European states.

Saudi Arabia’s Crown Prince Mohammed bin Salman said the hit on the world’s biggest crude exporter was a “real test of the global will” to confront subversion of the international order.

His envoy to London, Prince Khalid bin Bander, told the BBC the attack was “almost certainly” Iranian-backed, however: “We’re trying not to react too quickly because the last thing we need is more conflict in the region.”

“COMPELLING EVIDENCE”

U.S. Secretary of State Mike Pompeo was to meet Prince Mohammed in Jeddah on Wednesday to discuss the crisis before heading to the United Arab Emirates.

U.N. officials monitoring sanctions on Iran and Yemen were also heading to Saudi Arabia to investigate.

France, which is trying to salvage an international nuclear deal with Iran that Washington quit last year, said it wanted to establish the facts before reacting.

A U.S. official told Reuters the strikes originated in southwestern Iran. Three officials said they involved cruise missiles and drones, indicating a higher degree of complexity and sophistication than initially thought.

The officials did not provide evidence or explain what U.S. intelligence they were using for evaluating the attack, which cut 5% of global production.

Saudi Arabia said on Tuesday the 5.7 million barrels per day of output lost would be fully restored by the end of the month.

Oil prices fell after the Saudi reassurances, having surged more than 20% at one point on Monday – the biggest intra-day jump since the 1990-91 Gulf War. [O/R]

Saudi Arabia’s finance minister told Reuters on Wednesday the attack had no impact on revenues and Aramco was continuing to supply markets without interruption.

U.S. efforts to bring about a U.N. Security Council response look unlikely to succeed as Russia and China have veto powers and are expected to shield Iran.

Russian President Vladimir Putin, who has offered to sell Riyadh defense systems, called for a “thorough and impartial” probe during a phone call with Prince Mohammed.

The assault exposed serious gaps in Saudi air defense despite billions of dollars spent on Western military hardware and repeated attacks on vital assets during its four-and-a-half year foray into the Yemen war.

“The attack is like Sept. 11th for Saudi Arabia, it is a game changer,” said one Saudi security analyst.

IRAN-U.S. CONFLICT

Already frayed U.S.-Iran ties deteriorated further when Trump quit the nuclear pact and reimposed sanctions, severely hurting the Iranian economy. Iran has ruled out talks with Washington unless it returns to the pact.

Trump said he is not looking to meet Rouhani during a U.N. event in New York this month. Rouhani and his foreign minister may not attend the General Assembly at all unless U.S. visas are issued in the coming hours, state media reported Wednesday.

Washington and its Gulf allies want Iran to stop supporting regional proxies, including in Yemen, Iraq and Lebanon.

Despite years of air strikes against them, the Houthi movement boasts drones and missiles able to reach deep into Saudi Arabia, the result of an arms race since the Western-backed coalition intervened in Yemen in March 2015.

Iran’s clerical rulers support the Houthis, who ousted Yemen’s internationally recognized government from power in the capital Sanaa in late 2014. But Tehran denies it actively supports them with military and financial support.

Iran maintains the largest ballistic and cruise missile capabilities in the Middle East that could overwhelm virtually any Saudi missile defense system, according to think-tank CSIS, given the geographic proximity of Tehran and its proxy forces.

But even more limited strikes have proved too much for Saudi Arabia, including recent ones claimed by the Houthis on a civilian airport, oil pumping stations and the Shaybah oilfield.

(Reporting by Parisa Hafezi in Dubai and Stephen Kalin in Jeddah; Additional reporting by Guy Faulconbridge in London, Michelle Nichols in New York, Rania El Gamal, Davide Barbuscia and Marwa Rashad in Riyadh, Asma Alsharif and Sylvia Westall in Dubai, Alaa Swilam and Hisham El Saba in Cairo, Maria Kiselyova in Moscow; Tim Kelly in Tokyo, John Irish and Sudip Kar-Gupta in Paris, Phil Stewart and Steve Holland in Washington; Writing by Ghaida Ghantous and Andrew Cawthorne; Editing by Andrew Cawthorne and William Maclean)

Iran’s Khamenei rejects talks with United States

By Parisa Hafezi

DUBAI (Reuters) – Iran will never hold one-on-one talks with the United States but could engage in multilateral discussions if it returns to the 2015 deal on Iran’s nuclear program, Supreme Leader Ayatollah Ali Khamenei said on Tuesday, according to state television.

U.S. President Donald Trump has said he could meet Iranian President Hassan Rouhani, possibly at the U.N. General Assembly in New York later this month.

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

Khamenei said Iran’s clerical rulers were in agreement on this: “All officials in Iran unanimously believe it.

“If America changes its behavior and returns to (Iran’s 2015) nuclear deal, then it can join multilateral talks between Iran and other parties to the deal,” Khamenei said.

Trump has stepped up sanctions against Iran since last year when he withdrew from the nuclear pact between Iran and six world powers and reimposed sanctions that were lifted under the deal in return for Iran curbing its nuclear program.

In retaliation for the U.S. “maximum pressure” policy, Iran has gradually scaled back its commitments to the pact and plans to further breach it if the European parties fail to keep their promises to shield Iran’s economy from U.S. penalties.

“If we yield to their pressure and hold talks with Americans … This will show that their maximum pressure on Iran has succeeded. They should know that this policy has no value for us,” said Khamenei, who has the last say on all state matters.

Tensions between Tehran and Washington have spiked following a weekend attack on major oil sites in Saudi Arabia that sent oil prices soaring and raised fears of a new Middle East conflict.

Trump said on Monday it looked like Iran was behind the attacks but stressed he did not want to go to war. Iran has denied any involvement.

Iran’s regional rival, Saudi Arabia, said the attacks were carried out with Iranian weapons and it was capable of responding forcefully.

Saudi Arabia urged U.N. experts to help investigate the raid.

(Additional reporting by Asma Alsharif; Writing by Parisa Hafezi; Editing by Andrew Heavens, Robert Birsel)

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)

Trump says he does not want war after attack on Saudi oil facilities

By Steve Holland and Rania El Gamal

WASHINGTON/DUBAI (Reuters) – U.S. President Donald Trump said on Monday it looked like Iran was behind attacks on oil plants in Saudi Arabia but stressed he did not want to go to war, as the attacks sent oil prices soaring and raised fears of a new Middle East conflict.

Iran has rejected U.S. charges it was behind the strikes on Saturday that damaged the world’s biggest crude-processing plant and triggered the largest jump in crude prices in decades.

Relations between the United States and Iran have deteriorated since Trump pulled out of the Iran nuclear accord last year and reimposed sanctions over Tehran’s nuclear and ballistic programs. Washington also wants to pressure Tehran to end its support of regional proxy forces, including in Yemen where Saudi forces have been fighting Iran-backed Houthis for four years.

The United States was still investigating if Iran was behind the Saudi strikes, Trump said, but “it’s certainly looking that way at this moment”.

Trump, who has spent much of his presidency trying to disentangle the United States from wars he inherited, made clear, however, he was not going to rush into a new conflict on behalf of Saudi Arabia.

“I’m somebody that would like not to have war,” Trump said.

Several U.S. Cabinet members, including Secretary of State Mike Pompeo and Energy Secretary Rick Perry, have blamed Tehran for the strikes. Pompeo and others will travel to Saudi Arabia soon, Trump said.

A day after saying the United States was “locked and loaded” to respond to the incident, Trump said on Monday there was “no rush” to do so.

“We have a lot of options but I’m not looking at options right now. We want to find definitively who did this,” he said.

Iranian President Hassan Rouhani said the strikes were carried out by “Yemeni people” retaliating for attacks by a Saudi-led military coalition in a war with the Houthi movement.

“Yemeni people are exercising their legitimate right of defense,” Rouhani told reporters during a visit to Ankara.

Iranian Foreign Ministry spokesman Abbas Mousavi called the allegations “unacceptable and entirely baseless.”

The attacks cut 5% of world crude oil production.

Oil prices surged by as much as 19% after the incidents, the biggest intraday jump since the 1990-91 Gulf crisis over Iraq’s invasion of Kuwait. Prices retreated from their peak after Trump said he would release U.S. emergency supplies and producers said there were enough stocks globally to make up for the shortfall.

Japan said it will consider coordinated release of its oil reserves and other measures if needed to ensure sufficient supplies in the wake of the attacks.

Crude prices were down around 1% in Asian trade on Tuesday.

“The question is how long it takes for the supply to get back online,” said Esty Dwek, head of global market strategy at Natixis Investment Managers.

“However, the (geopolitical) risk premium … which has been basically ignored by markets in favor of growth worries in recent months, is likely to be priced in going forward,” she said.

SAUDI SUSPICIONS

Saudi Arabia said the attacks were carried out with Iranian weapons and urged U.N. experts to help investigate the raid.

Crown Prince Mohammed bin Salman said Iranian threats were not only directed against the kingdom but against the Middle East and the world.

While the prince did not directly accuse Tehran, a Foreign Ministry statement reported him as calling on the international community to condemn whoever was behind the strike.

“The kingdom is capable of defending its land and people and responding forcefully to those attacks,” the statement added.

Saudi Arabia and Iran have been enemies for decades and are fighting a number of proxy wars.

Trump said he had not made commitments to protect the Saudis.

“No, I haven’t promised Saudis that. We have to sit down with the Saudis and work something out,” he said. “That was an attack on Saudi Arabia, and that wasn’t an attack on us. But we would certainly help them.”

Two sources briefed on state oil company Saudi Aramco’s operations told Reuters it might take months for Saudi oil production to return to normal. Earlier estimates had suggested it could take weeks.

Saudi Arabia said it would be able to meet oil customers’ demand from its ample storage, although some deliveries had been disrupted. At least 11 supertankers were waiting to load oil cargoes from Saudi ports, ship tracking data showed on Monday.

RISING TENSIONS

Tension in the oil-producing Gulf region has dramatically escalated this year after Trump imposed severe U.S. sanctions on Iran aimed at halting its oil exports altogether.

For months, Iranian officials have issued veiled threats, saying that if Tehran is blocked from exporting oil, other countries will not be able to do so either. But Iran has denied a role in specific attacks, including bombings of tankers in the Gulf and previous strikes claimed by the Houthis.

Trump has said the goal from his “maximum pressure” approach is to force Iran to negotiate a tougher agreement and has left open the possibility of talks with Rouhani at an upcoming U.N. meeting. Iran says there can be no talks until Washington lifts sanctions.

U.N. Yemen envoy Martin Griffiths told the U.N. Security Council on Monday it was “not entirely clear” who was behind the strike but he said it had increased the chances of a regional conflict.

But the U.S. ambassador to the world body, Kelly Craft, said emerging information on the attacks “indicates that responsibility lies with Iran” and there is no evidence it came from Yemen.

Iran’s Yemeni allies have promised more strikes to come. Houthi military spokesman Yahya Sarea said the group carried out Saturday’s predawn attack with drones, including some powered by jet engines.

“We assure the Saudi regime that our long arm can reach any place we choose and at the time of our choosing,” Sarea tweeted. “We warn companies and foreigners against being near the plants that we struck because they are still in our sights.”

U.S. officials say they believe the attacks came from the opposite direction, possibly from Iran itself rather than Yemen, and may have involved cruise missiles. Wherever the attacks were launched, however, they believe Iran is to blame.

The attacks have raised questions about how Saudi Arabia, one of the world’s top spenders on weaponry, much of it supplied by U.S. companies, was unable to protect oil plants from attack.

Sensing a commercial opening, President Vladimir Putin said Russia was ready to help Saudi Arabia by providing Russian-made air defense systems to protect Saudi infrastructure.

Russia and China said it was wrong to jump to conclusions about who was to blame for the attack on Saudi Arabia.

(Reporting by Steve Holland in Washington and Rania El Gamal in Dubai; Writing by William Maclean, Mike Collett-White and Doina Chiacu; Editing by Alistair Bell, Peter Cooney & Simon Cameron-Moore)