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1 1 (September 16, 2019)

handle is hein.crs/govbbbj0001 and id is 1 raw text is: aCongressional - ~ Research Service Attacks Against Saudi Oil Rattle Markets September 16, 2019 September 14, 2019, saw a successful attack against major oil infrastructure in Saudi Arabia (the largest oil exporter), which disrupted 5.7 million barrels of daily production (mb/d), about half of Saudi oil production and 5% of global supply. This is the largest single disruption to crude oil supplies in history, according to Bloomberg, using International Energy Agency (IEA) data. For context, U.S. crude oil production is approximately 12 mb/d. Global oil markets have responded with an initial price increase. The magnitude and duration of the price rise will depend on many factors, such as repair time, additional supplies, the potential confirmation of the perpetrator, and any related security responses. Implications for Saudi Arabia The September 14, 2019, attacks on the Abqaiq processing facility and the Khurais oil field in eastern Saudi Arabia, claimed by Yemen's Houthi rebels, were the latest in a series of cross-border attacks on energy and transportation sites in the kingdom apparently linked to the ongoing war in Yemen and the Saudi-U.S. confrontation with Iran. The incidents have demonstrated the vulnerability of critical Saudi infrastructure to missile and drone attacks and raised complicated strategic questions for Saudi and U.S. policymakers concerning attribution and potential responses. Iran's government denies U.S. charges of responsibility. Saudi Arabia's military operations in Yemen have created demands on its security and defense capabilities in addition to fiscal pressures that have been amplified by oil prices, which have remained below the kingdom's budget targets. In response, Saudi leaders may delay a planned initial public offering of shares in their state-owned oil company, Aramco, which operates facilities and infrastructure targeted in recent months. Aramco intends to use its crude oil stockpiles to compensate for reduced output and expects to restore production to pre- attack levels. However, additional attacks, or delays in restoration efforts, could extend negative short- term effects and reduce investor confidence in the security of Aramco assets. Relative export volumes, prevailing market prices, and the extent of security and reconstruction costs will determine the attacks' fiscal effects on the kingdom, including in the event of any prolonged oil output disruptions. The Abqaiq Oil Facility The Abqaiq facility is the largest oil processing facility in the world, with a capacity of about 13 mb/d, but has been operating below its capacity. Abqaiq is a key processing facility for light and extra light Saudi oil that tend to be high in sulfur. To Congressional Research Service https://crsreports.congress.gov IN11167 CRS INSIGHT Prepared for Members and Committees of Congress

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