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World Crude oil supply crisis in market for the first...

Crude oil supply crisis in market for the first time due to attack on Saudi plant

Due to the drone attack by Houthi rebels, crude oil supply has decreased by 5.7 million barrels per day, which is 6% of the global supply

New Delhi: The attack by Yemen’s armed Houthi rebels on Saudi Arabia‘s oil plant has jeopardised the supply of crude oil in the international market. For the first time in nearly a century, this crisis has arisen in the industry.

The official Saudi Press Agency had said on Saturday, quoting an interior ministry spokesperson, the blazes at the facilities in Abqaiq, home to the company’s largest oil processing plant, and Khurais were under control. “At 4.00 AM (01:00 GMT) the industrial security teams of Aramco started dealing with fires at two of its facilities in Abqaiq and Khurais as a result of… drones,” it said, without mentioning whether there were casualties.

Due to the attack, the supply of crude oil has decreased by 5.7 million barrels per day, which is 6% of the global supply. According to a Bloomberg report, this is a serious challenge for the global crude supply chain in the coming years. A resultant uncontrolled Shia-Sunni strife could lead to drastic situations.

On Saturday morning, a Houthi rebel group carried out drone attacks on oil wells in Saudi Arabian company Aramco’s plant in Abak and Khurais. Since then, the Saudi Arabian oil company has reduced production by almost half.

Saudi oil company Aramco said it would reduce production for the next two days to repair the oil wells where the attack occurred.

Speaking to Bloomberg, Nigeria National Petroleum Corporation chief Mele Kayari said, “The attack in the Saudi Arabian plant is worrisome.” Protecting wells is challenging for the oil market. Attacks by drones have proved that advance rockets are not needed to attack oil wells.

US-based risk consultant Milena Rodbán said, “The use of drones suggests that enemies can influence oil supplies through aerial force.” He said Saudi Arabia’s facility centres or oil wells could be targets for forces other than Houthi rebels. This can be done also for the purpose of creating a stir in the oil market, causing uneasiness in investors.

This is the sixth time in the last four months that Saudi Arabia’s facility centres or supply tankers have been targeted.

The Houthi movement, officially called Ansar Allah (supporters or warriors of God), is an Islamic religious-political-armed struggle that emerged from Sa’dah in northern Yemen in the 1990s. They are of the Zaidi sect of Shi’ahs, though the movement reportedly also includes Sunnis.

Under the leadership of Hussein Badreddin al-Houthi, the group emerged as a Zaidi opposition to former Yemeni president Ali Abdullah Saleh, whom they charged with massive financial corruption and criticized for being backed by Saudi Arabia and the United States at the expense of the Yemeni people and Yemen’s sovereignty.

Resisting Saleh’s order for his arrest, Hussein was killed in Sa’dah in 2004 along with a number of his guards by the Yemeni army, sparking the Houthi insurgency in Yemen. Since then, except for a short intervening period, the movement has been led by his brother Abdul-Malik al-Houthi.

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