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DUBAI, United Arab Emirates (AP) — The weekend drone attack on one of the world’s largest crude oil processing plants that dramatically cut into global oil supplies is the most visible sign yet of how Aramco’s stability and security is directly linked to that of its owner — the Saudi government and its ruling family.
The strikes, which U.S. Secretary of State Mike Pompeo blamed on Iran despite staunch denials by Tehran, led to suspension of more than 5% of the world’s daily crude oil production, bringing into focus just how vulnerable the company is to Saudi Arabia’s conflicts outside the country’s borders, particularly with regional rival Iran.
That matters greatly because Aramco produces and exports Saudi Arabia’s more than 9.5 million barrels of oil per day to consumers around the world, primarily in Asia.
It also comes as the state-owned company heads toward a partial public sale. To prepare for an initial public offering, the company has recently taken steps to distance itself from the Saudi government, which is controlled by the Al Saud ruling family.
The plan to list part of Aramco is key to Crown Prince Mohammed bin Salman’s economic diversification efforts that are aimed at preparing the kingdom for a future less reliant on oil exports for revenue.
As he races to overhaul the economy, he’s also led Saudi Arabia as its defense minister into a war in Yemen that appears to have made the kingdom, and by extension Aramco, more vulnerable to attacks.
The pre-dawn attacks Saturday were claimed by Iranian-backed Yemeni rebels, although there are questions about whether the drones were launched from Yemen. Saudi Arabia has been at war with the Houthi rebels in Yemen since early 2015, but this is by far the most infrastructurally devastating attack inside the kingdom since the conflict began.
Eurasia Group notes that Saudi Arabia’s air defense systems are designed to defend against traditional threats but are ill-equipped to tackle asymmetrical aerial threats from drones. (truncated)
Article URL : https://www.apnews.com/74bc938507ba4a8297525e8aff23fcb9