Trump says US 'locked and loaded' for potential response to Saudi oil attack, authorises use of emergency oil stockpile

In tweets, President Donald Trump said the amount of oil released would be determined "sufficient to keep the markets well-supplied". PHOTO: REUTERS

WASHINGTON (REUTERS) - US President Donald Trump said on Sunday (Sept 15) 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.

Mr Trump 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.

"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!" Mr Trump said on Twitter.

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.

US Secretary of State Mike Pompeo also said 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 Shi'ite 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.

Iranian Foreign Ministry spokesman Abbas Mousavi dismissed the US allegation that 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 2,000km around Iran are within the range of our missiles," the semi-official Tasnim news agency quoted Commander Amirali Hajizadeh as saying.

Tensions between Washington and Teheran were already running high because of a long-running dispute between the two nations over Iran's nuclear programme that led the US to impose sweeping sanctions.

Oil prices surged more than 15 per cent at the open on Sunday on worries over global supply and soaring tensions in the Middle East.

State oil giant Saudi Aramco said the attack on its facilities at Abqaiq and Khurais last Saturday had cut output by 5.7 million barrels per day.

The US official, who asked not to be named, said on Sunday that 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 also says Teheran arms the Houthis, a charge both deny.

Mr Richard Nephew, a programme director at Columbia University's Centre on Global Energy Policy, said that if Iran was responsible for the attack, it may be as retribution for US sanctions.

"They are making decisions about whether and how to respond to what they see as a massive attack on their interests from the US via sanctions by attacking US interests in turn, and those of US partners they believe are responsible for US policy," he said.

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".

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.

Mr Trump said: "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."

The Saudi bourse closed down 1.1 per cent on Sunday, 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.

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