Drone attacks set Saudi crude plants ablaze: Update 2

Adds details on Abqaiq processing plant in second paragraph, IEA statement in third paragraph and Saudi storage capacity.

Drone attacks set ablaze the Saudi Arabian crude processing plant at Abqaiq — the largest of its kind in the world — and a second processing plant at the 1.45mn b/d Arab Light Khurais field at dawn today, a spokesman for the Saudi Arabian interior ministry said.

The plant at Abqaiq is state-owned Saudi Aramco's main centre for processing Arab Light and Arab Extra Light crude. It is the biggest crude stabilisation plant in the world and processed around half of Aramco's 10.3mn b/d of crude output last year, according to the company's April bond prospectus. Khurais is Saudi Arabia's second-largest oil field by capacity.

The IEA said it is in contact with Saudi authorities and major producer and consumer countries. "For now, markets are well supplied with ample commercial stocks," it said.

The fires were brought under control by Aramco, the interior ministry spokesman said, without giving any information about casualties or the extent of the damage caused by the drone attacks.

Yemen's Houthi rebels, who are fighting a war against local Saudi-backed forces, said they had targeted the two processing plants, located in eastern Saudi Arabia, using 10 drones.

"The air force carried out a massive offensive operation using 10 drones targeting processing plants in Abqaiq and Khurais that are affiliated to Aramco in eastern Saudi Arabia," Houthi armed forces spokesman brigadier-general Yahya Saree told the group's Al-Masirah television station today.

Saree said the attack is "the second part of operation Balanced Deterrence" and "part of our legitimate right to respond to the criminal attacks and continued siege of our country that have gone on for five years." He added that further "wider and more painful attacks" were planned.

A similar drone attack on Saudi Arabia's 1mn b/d Shaybah oil field on 17 August was then dubbed "the first part of operation Balanced Deterrence" by the Houthis. Aramco said at the time that the attack had caused a limited fire at an NGL plant, but not impacted crude production.

While the extent to which today's attack has affected processing of Arab Light and Arab Extra remains unclear, Aramco's exports of the two grades may not be immediately affected, given the company's massive domestic storage facilities. Aramco operates four crude terminals with a total storage capacity of 66.4mn bl as at the end of last year. Arab Light and Arab Extra Light together comprise 46.6pc of Saudi reserves, while overall Light crude production, which also includes Arab Super Light, accounts for over 70pc of Saudi oil production.

Saudi Arabia has been involved in Yemen's civil war since 2015, and much of its military activity has been carried out through aerial bombardments, which have exacted a high civilian casualty toll.

The UAE, which has been partnering Saudi Arabia in Yemen, withdrew its forces from southern Yemen some weeks ago, and the local militias it backs have been fighting the forces of the Saudi-backed Yemeni government. These developments have boosted speculation that southern Yemen, which considers the port city of Aden as its capital, could break away into a separate state.