Oil: Fear of terror attack in Saudi Arabia
Frenzy at the pit: Traders work in the energy options pit on the floor of the New York Mercantile Exchange. Oil prices rose to a new high in afternoon trading. Picture: AFP
Friday, July 4, 2008
AN ATTACK or even an attempted attack by Islamic rebels on Saudi Arabia's oil sector would have disastrous consequences on the world market and the price per barrel, analysts warn.
Of more than 700 people arrested in the course of the last six months in Saudi Arabia, dozens had been part of cells charged with preparing attacks against oil sites, according to authorities in Riyadh.
With the price per barrel rising constantly and the capacity to increase global production almost non-existent, apart from in Saudi Arabia, the world market has never been so vulnerable to an offensive by Jihadists in the kingdom, they said.
Michael Klare, head of the University of Massachusetts's peace and world security programme and author of the book "Resource Wars", said that even if an attack caused little damage, the impact would still be enormous.
"There would be a tremendous psychological effect because the market is already prepared to expect terrorist events like this. It would have an immediate effect on prices," he said.
"And if an attack actually damaged production or exploration, the effect would be even greater. The rise would be astronomical," he added.
Klare believes that a less significant attack would result in a price hike of no more than US$10 a barrel.
"(But) if they managed to destroy a major refinery or a major loading facility and cut production that would have a dramatic impact. Prices would go to US$200 a barrel," he said.
The Saudi oil sector, which spends considerable sums on security, has been an Al-Qaeda target for years.
Osama bin Laden in December 2004 called on followers in an audio message to "aim your operations at oil production in Iraq and in the Gulf".
In February 2006 assailants using two booby-trapped cars tried to enter the huge Abqaiq complex, the biggest in the world, in the east of the kingdom.
Francis Perrin, editor-in-chief of Arab Oil and Gas magazine, said the current price of oil revealed the concern over the fragility of world supplies and the danger that in future supply will no longer satisfy demand.AFP
Of more than 700 people arrested in the course of the last six months in Saudi Arabia, dozens had been part of cells charged with preparing attacks against oil sites, according to authorities in Riyadh.
With the price per barrel rising constantly and the capacity to increase global production almost non-existent, apart from in Saudi Arabia, the world market has never been so vulnerable to an offensive by Jihadists in the kingdom, they said.
Michael Klare, head of the University of Massachusetts's peace and world security programme and author of the book "Resource Wars", said that even if an attack caused little damage, the impact would still be enormous.
"There would be a tremendous psychological effect because the market is already prepared to expect terrorist events like this. It would have an immediate effect on prices," he said.
"And if an attack actually damaged production or exploration, the effect would be even greater. The rise would be astronomical," he added.
Klare believes that a less significant attack would result in a price hike of no more than US$10 a barrel.
"(But) if they managed to destroy a major refinery or a major loading facility and cut production that would have a dramatic impact. Prices would go to US$200 a barrel," he said.
The Saudi oil sector, which spends considerable sums on security, has been an Al-Qaeda target for years.
Osama bin Laden in December 2004 called on followers in an audio message to "aim your operations at oil production in Iraq and in the Gulf".
In February 2006 assailants using two booby-trapped cars tried to enter the huge Abqaiq complex, the biggest in the world, in the east of the kingdom.
Francis Perrin, editor-in-chief of Arab Oil and Gas magazine, said the current price of oil revealed the concern over the fragility of world supplies and the danger that in future supply will no longer satisfy demand.AFP
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