Oil facility attacks in the UAE and KSA: What you need to know

After two recent attacks on oil facilities, hitting Saudi Aramco's oil pumping stations and oil tankers off the Fujairah coast, these are the next steps

Saudi Arabia's East-West pipeline transports 5mbpd of crude. Photo for illustrative purposes.
Saudi Arabia's East-West pipeline transports 5mbpd of crude. Photo for illustrative purposes.

On 12 May, four commercial ships were sabotaged in the Gulf of Oman, near UAE territorial waters, including two Saudi oil tankers. Two days later, two of Saudi Aramco's oil pumping stations on its East-West Pipeline were targeted in drone attacks. 

"Saudi Aramco took precautionary measures and temporarily stopped operation of the pipeline, as it is evaluating the situation and working on restoring the operations of the affected pump station and the pipeline," KSA Energy Minister Khalid Al-Falih said, according to state press agency SPA.

Pumping station 8 caught fire, causing minor damage, but oil and gas supplies were not affected, and no casualties have been reported. Yemen's Houthi rebels claimed responsibility for the drone attack. Saudi Arabia has since restarted operations at the pipeline, which transports 5mn barrels per day (bpd) of crude oil.

Meanwhile, the two Saudi tankers attacked off the the coast of Fujairah sustained damage, but there were no casualties and no oil was spilled.

Although these attacks did not disrupt oil and gas production and supply, geopolitical tensions play into the oil market, and OPEC Secretary General Mohammad Barkindo noted that they would be considered in the upcoming OPEC+ meeting in Jeddah, where the alliance is due to discuss changes to supply ahead of a full ministerial meeting in Vienna.

"We need peace and stability," said Barkindo. "This region has seen enough turmoil. It's not about capacity, it's about peace. This is a strategic region. Whatever happens impacts the rest of the world."

This follows the cancellation of waivers from the US to eight of Iran's oil buyers, which will see the market tighten as around 1mn barrels of production are slashed. Iran has also said it could close the Strait of Hormuz, which is a strategic point for global crude, through which around 17.5mn barrels of crude passes per day. 

Saudi Arabia's oil production is particularly important in light of sanctions against Iran, as KSA is expected to fill the supply gap. While these attacks did not disrupt Saudi supply, they have escalated geopolitical tensions.

Many Arab countries, international organisations, and Iran, denounced the attacks and any attempts to destabilise the region.

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Oil & Gas Middle East - May 2019

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