Donald Trump says US 'locked and loaded' for potential response to Saudi oil attack

U.S. President Donald Trump said on Sunday that the United States was "locked and loaded" for a potential response to the attack on Saudi Arabia`s oil facilities, after a senior official in his administration said Iran was to blame. Trump also authorized the use of the U.S. emergency oil stockpile to ensure stable supplies after the attack, which shut 5% of world production.

"There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!" Trump said on Twitter. Earlier in the day, a senior U.S. official told reporters that evidence from the attack, which hit the world`s biggest oil-processing facility, indicated Iran was behind it, instead of the Yemeni Houthi group that had claimed responsibility.

U.S. Secretary of State Mike Pompeo also said there was no evidence the attack came from Yemen, where a Saudi-led coalition has been battling the Houthis for over four years in a conflict widely seen as a proxy war between Saudi Arabia and Shi`ite Muslim rival Iran. "Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world`s energy supply," he said.

Iranian Foreign Ministry spokesman Abbas Mousavi dismissed the U.S. allegation it was responsible as "pointless". A senior Revolutionary Guards commander warned that the Islamic Republic was ready for "full-fledged" war. "All American bases and their aircraft carriers in a distance of up to 2,000 kilometres around Iran are within the range of our missiles," the semi-official Tasnim news agency quoted Commander Amirali Hajizadeh as saying.

Tensions between Washington and Tehran were already running high because of a long-running dispute between the two nations over Iran`s nuclear program that led the United States to impose sweeping sanctions. Oil prices surged more than 15% at the open on Sunday on worries over global supply and soaring tensions in the Middle East. State oil giant Saudi Aramco said the attack on Saturday had cut output by 5.7 million barrels per day.

The U.S. official, who asked not to be named, said on Sunday there were 19 points of impact in the attack on Saudi facilities and that evidence showed the launch area was west-northwest of the targets - not south from Yemen. The official added that Saudi officials indicated they had seen signs that cruise missiles were used in the attack, which is inconsistent with the Iran-aligned Houthi group’s claim that it conducted the attack with 10 drones.

"There`s no doubt that Iran is responsible for this. No matter how you slice it, there`s no escaping it. There`s no other candidate," the official told reporters. Riyadh has accused Iran of being behind previous attacks on oil-pumping stations and the Shaybah oil field, charges that Tehran denies, but has not blamed anyone for Saturday`s strike. Riyadh also says Tehran arms the Houthis, a charge both deny.

Richard Nephew, a program director at Columbia University`s Center on Global Energy Policy, said that if Iran was responsible for the attack, it may be as retribution for U.S. sanctions. "They are making decisions about whether and how to respond to what they see as a massive attack on their interests from the U.S. via sanctions by attacking U.S. interests in turn, and those of U.S. partners they believe are responsible for U.S. policy," he said.

Aramco gave no timeline for output resumption. A source close to the matter told Reuters the return to full oil capacity could take "weeks, not days". Riyadh said it would compensate for the damage at its facilities by drawing on its stocks, which stood at 188 million barrels in June, according to official data. Trump said that "based on the attack on Saudi Arabia, which may have an impact on oil prices, I have authorized the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount sufficient to keep the markets well-supplied."

The Saudi bourse closed down 1.1% on Sunday, with banking and petrochemical shares taking the biggest hit. Saudi petrochemical firms announced a significant reduction in feedstock supplies. "Abqaiq is the nerve center of the Saudi energy system. Even if exports resume in the next 24 to 48 hours, the image of invulnerability has been altered," Helima Croft, global head of commodity strategy at RBC Capital Markets, told Reuters.

CALLS FOR RESTRAINT
According to the U.S. official, 17 structures at Abqaiq sustained damage on their west-northwest facing sides, along with two points of impact at Saudi`s Khurais oil field. Consultancy Rapidan Energy Group said images of the Abqaiq facility after the attack showed that about five of its stabilization towers appeared to have been destroyed, and would take months to rebuild - something that could curtail output for a prolonged period.

"However Saudi Aramco keeps some redundancy in the system to maintain production during maintenance," Rapidan added, meaning operations could return to pre-attack levels sooner. Some Iraqi media outlets said the attack came from there. Baghdad denied that on Sunday and vowed to punish anyone using Iraq, where Iran-backed paramilitary groups wield increasing power, as a launchpad for attacks.

Kuwait, which borders Iraq, said it was investigating the sighting of a drone over its territory and coordinating with Saudi Arabia and other countries. U.N. Secretary-General Antonio Guterres condemned Saturday`s attacks and called on all parties to exercise restraint and prevent any escalation. The European Union warned that the strikes posed a real threat to regional security, and several nations urged restraint.

The attack came after Trump said a meeting with Iranian President Hassan Rouhani was possible at the U.N. General Assembly in New York this month. Tehran ruled out talks until sanctions are lifted. But Trump appeared on Sunday to play down the chances he might be willing to meet with Iranian officials, saying reports he would do so without conditions were not accurate. As recently as last Tuesday, Pompeo said that Trump "is prepared to meet with no preconditions."

Saudi de facto ruler Crown Prince Mohammed bin Salman told Trump that Riyadh was ready to deal with "terrorist aggression". A Saudi-led coalition has responded to past Houthi attacks with air strikes on the group`s military sites in Yemen. The conflict has been in military stalemate for years. The Saudi alliance has air supremacy but has come under scrutiny over civilian deaths and a humanitarian crisis that has left millions facing starvation.