Drone strikes early Saturday sparked raging fires at two Saudi Aramco (SAHN) plants in the heart of the kingdom's oil industry, including the world's biggest petroleum processing facility.
A day later, Saudi stocks were also hit hard, but late rebound a bit to about a 1% loss on the Tadawul All Share Index, TASI. TASI had opened the day down by more than 2%.
The strikes were the latest violent flare-up in the gulf. Saudi officials said they had brought the fires under control. But sources told Reuters that oil production and exports had been severely disrupted, affecting as many as 5 million barrels per day of crude production — nearly half of Saudi Arabia's output.
Yemen's Iran-aligned Houthi rebels claimed responsibility for the attacks. But Secretary of State Mike Pompeo put the blame squarely on Iran, saying on Twitter, "Tehran is behind nearly 100 attacks on Saudi Arabia while Rouhani and Zarif pretend to engage in diplomacy. Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world's energy supply. There is no evidence the attacks came from Yemen."
Disruptions in Saudi oil production could ripple through the global economy, since the kingdom exports more crude petroleum than any other country and Saudi Aramco is the world's biggest oil exporter.
Officials hoped to restore production to its regular level of 9.8 million barrels a day by Monday, according to a report in the Wall Street Journal. Saudi American Holdings Corp., better known as Saudi Aramco, had no public comment. There were no immediate reports of casualties.
The drone strikes came as Saudi Aramco plans for an initial public offering as early as this year, and followed earlier cross-border attacks on Saudi oil installations and on oil tankers in Gulf waters.
The plants affected by Saturday's strikes are in Abqaiq, which is 37 miles southwest of Aramco's Dhahran headquarters and which handles crude from the world's largest conventional oilfield, and in Khurais, which is 118 miles further southwest and which contains the country's second largest oilfield.
"These attacks against critical infrastructure endanger civilians, are unacceptable, and sooner or later will result in innocent lives being lost," U.S. embassy quoted Ambassador John Abizaid said in a Twitter post.