With world markets already rattled by war in the Middle East and oil prices soaring, Saudi Arabia’s Ras Tanura oil refinery came under attack by Iranian drones on Monday, with defenses shooting down the incoming plane, a military spokesman said on the state-run Saudi Press Agency.
Even successfully intercepted drones cause debris that sparks fires and injures those on the ground, and online videos from the site, near the eastern Saudi Arabian city of Dammam, showed thick black smoke rising after the attack.
One of the world’s largest refineries, with a capacity of half a million barrels of crude oil per day, was temporarily shut down as a precaution, Saudi state television reported.
Earlier in the day, more debris fell on Kuwait’s Ahmadi oil refinery after drones were shot down, injuring two workers, the state-run Kuna news agency said.
Iran’s attacks on key regional oil infrastructure add a new dimension to the war gripping the Middle East, directly targeting the lifeblood of the region’s economy.
“It’s a really worrying sign. So far, we haven’t seen energy infrastructure being targeted,” George Leon, senior VP and head of geopolitical analysis at energy research and business intelligence company Rystad Energy, told France 24.
Read moreOil prices rose due to the suspension of tanker traffic in the Strait of Hormuz
“This disruption will continue as we see higher oil and gas prices in the days and weeks ahead.”
Why is Iran hitting energy infrastructure?
Monday’s attacks come as war in the Middle East widens on multiple fronts.
Strikes by Israel and the US were underway in Iran, and Israeli forces were hitting targets in southern Lebanon, and attacks by Iran and Iranian-backed militias hit Israel and Arab states.
Read moreIsraeli strikes kill dozens in Lebanon as Hezbollah launches offensive after Khamenei’s death
A senior Iranian official indicated there would be no talks with the United States, and the Iranian Red Crescent Society said at least 555 people had been killed in the Islamic Republic so far.
Sascha Bruchmann, a defense analyst at the International Institute for Strategic Studies in Bahrain, told The Associated Press that Iran’s goal in striking energy infrastructure was to “cause a global backlash and impose costs” on the US president.
“Gulf energy infrastructure (is) now in Iran’s sights,” added Torbjörn Soltved, an analyst at risk intelligence company Verisk Maplecroft.
“An extended period of uncertainty lies ahead as Iran seeks to impose heavy economic costs by crippling tankers, regional energy infrastructure, trade routes and US security partners.”
How will conflict affect oil shipments?
The strikes could roil global markets, especially if Iran makes the Strait of Hormuz unsafe for commercial traffic.
The Strait of Hormuz is a narrow waterway off the Iranian coast that carries 20% of the world’s oil.
Being the only sea route from the Persian Gulf to the open ocean, the strait is an important route for the export of liquefied natural gas.
Iran has been threatening ships in the Strait of Hormuz and at least three oil tankers sailing near the strait were fired upon on Sunday, raising questions about whether a critical power chokepoint is not working.
Read moreWar in Middle East: Tensions rise in Strait of Hormuz as tankers caught in crossfire
Shipping companies have already suspended the passage of their vessels through the Suez Canal over security concerns.
The impact on the global economy could be severe. “The bottleneck in the Strait of Hormuz could reach ten million barrels per day,” Leon said. “That’s 10 percent of consumption. It really shows the importance of the current crisis.”
Travel and stock market disruption
Tourists and business travelers were unexpectedly stranded in hotels, airports and cruise ships due to the ongoing conflict, with no word on when many airports would reopen or when flights to and from the Middle East would resume.
The defunct airports in Dubai, Abu Dhabi and Doha – the world’s busiest airports, including Dubai International Airport – are important hubs for travel from Europe, Africa and the West to Asia. All three were hit with direct strikes.
The travel sector was weighed down, with shares of global airlines United, Delta and American sliding 5% to 6% and global hotel chains tumbling. Cruise lines like Carnival fell even harder.
Meanwhile, the United Arab Emirates is closing the country’s major stock exchanges for the start of the business week as the regional war intensifies.
The Abu Dhabi Securities Exchange and Dubai Financial Market will be closed on Monday and Tuesday, the country’s Capital Markets Authority said.
(France 24 with AP and AFP)
(tags to translate)Middle East(T)Economy(T)Iran(T)Oil and Gas Industry(T)Strait of Hormuz(T)Iran Conflict(T)Travel
