OIL SHOCK: AS TRUMP WARNS U.S. ‘LOCKED & LOADED’ – MALAYSIA, WHICH ACTUALLY STANDS TO GAIN FROM SKY-ROCKETING OIL PRICES, PREPARES ‘TO PROVIDE SUBSIDY’ FOR ITS ALREADY STRETCHED CONSUMERS

PUTRAJAYA – Saudi Arabia’s move to temporarily suspend production at the state-owned Aramco’s two major oil facilities following drone attacks by Yemeni rebels will definitely impact global oil prices, says Prime Minister Tun Dr Mahathir Mohamad.

However, he said in Malaysia, the government practices intervention through a subsidy to offset the price hikes.

“If Saudi Arabia has to stop refined oil production by one million barrels (per day), it will definitely impact the global oil prices.

“In Malaysia, when there is an oil price hike, we will provide a subsidy. Unlike in the United Kingdom, if the price of oil soars, the government will raise the tax and the people don’t complain, ” he told a press conference after watching the Putrajaya Boat Race 2019 here Sunday (Sept 15).

The prime minister said this when asked whether the government would review the retail price of RON95 petrol, which currently stood at RM2.08 per litre, if global oil prices soar following the attacks.

Saudi Arabian energy minister Prince Abdulaziz Salman was quoted by Saudi state news agency SPA on Sunday as saying that the attacks on Abqaiq and Khurais, two key Aramco facilities in eastern Saudi Arabia, have partially halted crude and gas production from the world’s top oil exporter.

In a separate statement, Aramco said the attacks “had resulted in production suspension of 5.7 million barrels of crude oil per day”.

The drone attacks on Abqaiq and Khurais were the latest incidents of terrorist aggression on Saudi oil facilities in recent months.

The Iran-linked Houthi rebels said they launched “a large-scale operation involving 10 drones” on the facilities, the group’s Al-Masirah television station reported.

– Bernama

Trump says US is ‘locked and loaded’ for potential response to Saudi oil attack

WASHINGTON – US President Donald Trump said yesterday that the United States was “locked and loaded” for a potential response to the attack on Saudi Arabia’s oil facilities, after a senior official in his administration said Iran was to blame.

“There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!” Trump said on Twitter

He said he had also authorised the use of the US emergency oil stockpile to ensure stable supplies after the attack, which shut 5 per cent of world production.

“Based on the attack on Saudi Arabia, which may have an impact on oil prices, I have authorised the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount sufficient to keep the markets well-supplied,” Trump said.

Oil prices surged more than 15 per cent at the open yesterday on worries over global supply and soaring tensions in the Middle East. State oil giant Saudi Aramco said the attack on Saturday had cut output by 5.7 million barrels per day.

Earlier in the day, a senior US official told reporters that evidence from the attack, which hit the world’s biggest oil-processing facility, indicated Iran was behind it, instead of the Yemeni Houthi group that had claimed responsibility.

Iranian Foreign Ministry spokesman Abbas Mousavi dismissed the US allegation it was responsible as “pointless”. A senior Revolutionary Guards commander warned that the Islamic Republic was ready for “full-fledged” war.

“All American bases and their aircraft carriers in a distance of up to 2,000 kilometres around Iran are within the range of our missiles,” the semi-official Tasnim news agency quoted Commander Amirali Hajizadeh as saying.

The US official, who asked not to be named, said yesterday there were 19 points of impact in the attack on Saudi facilities and that evidence showed the launch area was west-northwest of the targets — not south from Yemen.

The official added that Saudi officials indicated they had seen signs that cruise missiles were used in the attack, which is inconsistent with the Iran-aligned Houthi group’s claim that it conducted the attack with 10 drones.

“There’s no doubt that Iran is responsible for this. No matter how you slice it, there’s no escaping it. There’s no other candidate,” the official told reporters.

Riyadh has accused Iran of being behind previous attacks on oil-pumping stations and the Shaybah oil field, charges that Tehran denies. Saudi Arabia has not yet blamed any party for Saturday’s strike. Riyadh also says Tehran arms the Houthis, a charge both deny.

Aramco gave no timeline for output resumption. A source close to the matter told Reuters the return to full oil capacity could take “weeks, not days”.

Traders and analysts said crude may spike to as high as US$100 (RM417) a barrel if Riyadh fails to quickly bring back supply.

Another source briefed on the developments said Saudi oil exports would continue to run as normal this week thanks to large storage in the kingdom, the world’s top oil exporter. It ships more than 7 million barrels daily to global destinations.

Riyadh said it would compensate for the damage at its facilities by drawing on its stocks, which stood at 188 million barrels in June, according to official data. The United States said it was also ready to tap emergency oil reserves if needed.

The Saudi bourse closed down 1.1 per cent yesterday, with banking and petrochemical shares taking the biggest hit. Saudi petrochemical firms announced a significant reduction in feedstock supplies.

“Abqaiq is the nerve centre of the Saudi energy system. Even if exports resume in the next 24 to 48 hours, the image of invulnerability has been altered,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told Reuters.

‘Unprecedented attack’

According to the US official, 17 structures at Abqaiq suffered damage on their west-northwest facing sides, along with two points of impact at Saudi’s Khurais facility.

US Secretary of State Mike Pompeo said earlier that there was no evidence the attack came from Yemen, where a Saudi-led coalition has been battling the Houthis for over four years in a conflict widely seen as a proxy war between Saudi Arabia and Shiah Muslim rival Iran.

“Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply,” he said.

Some Iraqi media outlets said the attack came from there. Baghdad denied that on Sunday and vowed to punish anyone using Iraq, where Iran-backed paramilitary groups wield increasing power, as a launchpad for attacks.

Kuwait, which borders Iraq, said it was investigating the sighting of a drone over its territory and coordinating with Saudi Arabia and other countries. The Cabinet said the prime minister ordered tighter security at vital installations.

Regional tensions have escalated since Washington quit an international nuclear deal and extended sanctions on Iran.

UN Secretary-General Antonio Guterres condemned Saturday’s attacks and called on all parties to exercise restraint and prevent any escalation.

The European Union warned that the strikes posed a real threat to regional security, Britain called them a “reckless attempt” to disrupt global oil supplies and France said such actions could only worsen the “risk of conflict”. Iran’s ally Turkey called for the avoidance of “provocative steps”.

US-Iran talks 

The attack came after Trump said a meeting with Iranian President Hassan Rouhani was possible at the UN General Assembly in New York this month. Tehran ruled out talks until sanctions are lifted.

But Trump appeared yesterday to play down the chances he might be willing to meet with Iranian officials, saying reports he would do so without conditions were not accurate.

Saudi de facto ruler Crown Prince Mohammed bin Salman told Trump that Riyadh was ready to deal with “terrorist aggression”. A Saudi-led coalition has responded to past Houthi attacks with air strikes on the group’s military sites in Yemen.

The conflict has been in military stalemate for years. The Saudi alliance has air supremacy but has come under scrutiny over civilian deaths and a humanitarian crisis that has left millions facing starvation. The Houthis, more adept at guerrilla warfare, have increased attacks on Saudi cities, thwarting peace efforts.

— Reuters

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