Saudis Halt Oil Pipe on Attack Claimed by Iran-Backed Rebels

By Anthony DiPaola and Dana Khraiche, Bloomberg

Saudi Arabia halted its main cross-country oil pipeline temporarily after a drone attack damaged pumping stations along the link, a strike claimed by Iran-backed rebels in neighboring Yemeni. Oil prices rose.

Saudi Aramco, the world’s biggest oil exporter, said that supplies of crude and products continued “normally without interruption,” the official Saudi Press Agency reported, citing the energy ministry.

“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 Energy Minister Khalid Al-Falih said in a statement.

The attack comes amid rising tensions in the Persian Gulf region as the U.S. increases pressure on Iran, the regional rival of Saudi Arabia and the United Arab Emirates. On Monday, Saudi Arabia said two of its oil tankers were among several vessels attacked off the U.A.E. coast near the Strait of Hormuz, the world’s most important chokepoint for oil shipments.

Neither Saudi Arabia nor the U.A.E. said exactly what happened to the tankers, and neither country identified potential culprits. However, the manager of one of the tankers that was hit said it suffered hole in its hull after an unknown object struck it off the U.A.E. coast.

Saudi Arabia Says Oil Tankers Attacked as Iranian Tensions Rise

The U.S. earlier this month ended exceptions to sanctions on Iranian oil sales, prompting the Islamic Republic to threaten to block oil shipments through the Strait of Hormuz. Iran has denounced Sunday’s maritime incident and warned against attempts to destabilize the region.

The recent attacks are acts of “terrorism and sabotage” that target not only Saudi Arabia but also “the security of world oil supplies and the global economy,” Al-Falih said.

Iranian-backed Houthi rebels in Yemen said earlier on Tuesday that they had targeted key Saudi installations using seven drones, according to the rebel-controlled Saba news agency. No injuries or fatalities were reported in the attack, according to an emailed statement from Saudi Aramco.

Rebel Attacks

One of the pumping stations that was hit was about 700 kilometers (435 miles) from the Yemeni border. Houthi forces possess unmanned aerial vehicles that can reach targets as far as 1,500 kilometers away, according to a UN report issued in January.

The state producer officially known as Saudi Arabian Oil Co. halted the pipeline transporting oil from eastern fields to the port of Yanbu on the western coast as a precautionary, temporary measure after armed drones attacked two pumping stations, igniting a fire that caused minor damage to one, according to SPA.

The East-West pipeline spans 1,200 kilometers from Dhahran on Saudi Arabia’s Gulf coast to Yanbu on the Red Sea, allowing oil shipments from the kingdom to bypass the Strait of Hormuz. The pipeline can transport 5 million barrels a day across the country for use in its own refineries and for export from the port of Yanbu. Aramco is working to expand the pipeline’s capacity to 6.5 million barrels of crude a day by 2023, according to a bond prospectus.

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