Saudi Aramco has shut down its Ras Tanura refinery as a precautionary measure after the facility was hit by a drone, in an escalation of the Iran war that now threatens to ensnare the whole of the Middle East. Crude oil prices surged to $80/barrel on the news.
Two drones were intercepted at the facility, with the debris causing a limited fire, a spokesperson for the Saudi Defence Ministry said on Al Arabiya TV, adding there were no injuries.
The shuttering of Saudi Aramco’s Ras Tanura refinery—among the largest in Saudi Arabia—will likely add to supply worries as the Strait of Hormuz grinds to a near-halt. At least three tankers were attacked in the waterway that carries nearly a fifth of world’s crude oil supply daily.
“The attack on Saudi Arabia’s Ras Tanura refinery marks a significant escalation, with Gulf energy infrastructure now squarely in Iran’s sights,” Torbjorn Soltvedt, principal Middle East analyst at risk intelligence firm Verisk Maplecroft, told Reuters. “The attack is also likely to move Saudi Arabia and neighbouring Gulf states closer to joining US and Israeli military operations against Iran.”
The Ras Tanura complex, on the kingdom’s Gulf coast, houses one of the Middle East’s largest refineries with a capacity of 550,000 barrels per day (bpd) and serves as a critical export terminal for Saudi crude.
Aramco did not immediately respond to an emailed request for comment.
The drone strike added to a wave of attacks on the region, including on Abu Dhabi, Dubai, Doha, Manama and Oman’s commercial port of Duqm. Most of oil production in the Kurdistan region of Iraq, which exported around 200,000 bpd in February to Turkey, was shut down over the weekend as a precaution.
Saudi Arabia’s heavily fortified energy facilities have been targeted previously, most notably in September 2019 when unprecedented drone and missile attacks on the Abqaiq and Khurais plants temporarily knocked out more than half of the kingdom’s crude production and roiled global markets.
Ras Tanura was attacked by Yemen’s Iran-aligned Houthis in 2021, in what Riyadh called a failed assault on global energy security.
Crude Oil Prices
West Texas Intermediate, the light, sweet crude oil produced in the United States, was selling for $72.79 a barrel early Monday, up 8.6% from its trading price of about $67 on Friday, according to data from CME group.
A barrel of Brent crude—the international standard—was trading at $79.41 per barrel early Monday, according to FactSet, up 9% from its trading price of $72.87 on Friday, at the time a seven-month high.
Higher global energy prices mean consumers will pay more for gasoline at the pump and have to shell out more for groceries and other goods at a time when many are already feeling the impacts of elevated inflation.
