The ability of a handful of drones to damage some of Saudi Arabia's biggest oil plants has raised questions why the world's largest crude exporter was apparently caught by surprise by the attacks, and didn't cut them off well before they landed, analysts said.
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Saudi Arabia is blaming "terrorist attacks" for the incidents on two of its oil facilities in Abqaiq and Khurais on Saturday, causing the loss of 5.7 million b/d of its oil production, or about 5% of global output. Two days since then, Saudi Aramco hasn't updated the market how long its facilities will need for repairs or when full production will be achieved.
"The fact that such a large attack can be performed on a facility which allegedly had a ring of steel around it raises concerns for any facility," Chris Midgley, global director of S&P Global Platts Analytics, said. "It appears that this was an attack by a 'swarm' of drones which could be replicated elsewhere."
Yemeni-based and Iran-linked Houthis claimed responsibility for the attacks, while Mike Pompeo, US secretary of state, blamed Iran. Iran's foreign ministry spokesman Abbas Mousavi said Sunday that allegations of Iran being responsible for the Saudi attacks are "incomprehensible," according to state news agency IRNA.
The Houthis have in the past claimed responsibility for attacks aimed at Saudi Arabian infrastructure, including one in June on the kingdom's East-West pipeline which links Abqaiq to export facilities on the coast. But doubts have been raised over whether the Houthis have sophisticated enough technology to launch such attacks.
"The ability to conduct this attack in Saudi serves as a model for non-state actors to use drones to threaten or interrupt energy production," said Theodore Karasik, senior advisor at Gulf State Analytics in Washington.
"The question is whether there's this gap in air defense when it comes to drone technologies, because everything has been built for missile systems," Karasik told Platts.
The recent attacks against oil tankers in the Persian Gulf and Saudi Arabia's East-West pipeline could be brushed aside because they didn't cause major damage, said Torbjorn Soltvedt, principal MENA analyst at Verisk Maplecroft.
"If the intention then was to demonstrate the vulnerability of Saudi energy infrastructure, the attacks against Abqaiq and Khurais were a much less subtle message," he said.
Drones were once difficult to find and are now easy for militia to get their hands on, according to Karasik. Technology to modify drones is also becoming smarter and it's now easier for drones to be aimed at energy infrastructure, he said.
Such threats are a worry not just for the Middle East region but also for critical infrastructure elsewhere, said S&P's Midgley, including Cushing, Oklahoma. Other Middle East energy hotspots that may also be vulnerable include Iraqi oil fields and the UAE's Fujairah, the region's largest commercial inventory of refined oil products.
Saudi neighbor Kuwait is investigating the sighting of a drone over its territory and is coordinating with Saudi Arabia and other countries, Kuwait Times reported Monday, citing a Kuwait cabinet statement.
"The vulnerability of Abqaiq is that it is a lot of processing plants as opposed to tanks where you can more easily cause damage," Midgely said.
There have been conflicting theories on whether the drones were launched from southern Iraq across Kuwait or even from within Saudi Arabia itself, sources told Platts.
"You can't erase centuries of interaction between peoples, particularly in the south," Karasic said. "Some people argue that these drones could actually be coming from within Saudi Arabia itself, for example, some people are arguing that the attack on the East-West pipeline was shot from nearby which is why it wasn't picked up."
The key question is how long drones can knock out production and what impact the attacks have on oil prices. Brent crude rose almost 20% when markets reopened on Monday.
Missile attacks would have a greater impact than drones, but drones may have the capabilities to fly to more remote destinations, such as pumping stations or pipeline infrastructure, and delay repair, impacting on flows.
Moving forward, companies may need to rethink if new guidelines that address air threats to their plants are needed as part of security plans, according to Karasik.
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