WASHINGTON – Crude oil futures prices jumped 4 percent Friday after a thwarted attack on a massive oil facility in Saudi Arabia rattled a market already jittery about supply disruptions in Nigeria and Iran's nuclear ambitions.
Saudi Arabia is the world's largest oil producer, with output of about 9.5 million barrels per day, or 11 percent of global consumption. The target of the attack, the Abqaiq oil complex in eastern Saudi Arabia, processes about two-thirds of the country's oil before it is exported.
Suicide bombers in explosives-packed cars attacked the heavily guarded facility but were foiled when guards opened fire, detonating the vehicles and killing the attackers, Interior Ministry spokesman Lt. Gen. Mansour al-Turki told The Associated Press. The vehicles exploded outside the first of three fences around the sprawling complex, al-Turki said.
Saudi oil minister Ali Naimi said the attack caused "a small fire" that was brought under control and that operations were not affected.
While terror attacks are not new to Saudi Arabia — there were two highly publicized attacks against oil company offices and employee-compounds in the spring of 2004 — analysts said Friday's action was noteworthy because of how close the perpetrators came to a facility integral to the flow of oil.
"It's new in the sense that this is the boldest attempt to strike at the heart of a Saudi oil-production complex," Eurasia Group oil analyst Antoine Halff said. "So far they had been confined to office buildings and housing units."
"At the same time, what this attack demonstrates is not just how much the Saudi oil machine is a target for attacks, but also how prepared the Saudi oil company and military are, and how effective they are at thwarting attempts to disrupt oil production and exports," Halff added. "There are two sides to this."
Light sweet crude for April delivery surged as high as $63.25 a barrel before settling at $62.91, an increase of $2.37 on the New York Mercantile Exchange. Brent crude futures for April delivery jumped $1.81 to $62.35 on London's ICE Futures exchange.
A Saudi journalist who arrived at the scene soon after an explosion said guards exchanged fire for two hours with two militants outside the facility. He also told The Associated Press that he saw workers repairing a pipeline. He spoke on condition of anonymity because of the sensitivity of the situation.
UBS energy economist Jan Stuart said the reaction on oil markets was "measured" given the prominence of the Abqaiq facility and the ability of the attackers to get so close to it.
Aside from its total output, Saudi Arabia is a vital supplier to the global market because it is the only country with significant spare production capacity. If necessary, Saudi Arabia says it could quickly boost production by 1.5 million barrels a day.
By contrast, there is no other country that can add meaningful output to offset an unexpected disruption. The emergency supply of last resort would be the 4 billion barrels of stocks that the International Energy Agency lays claim to.
Nymex gasoline advanced by 3.72 cents to finish at $1.5506 a gallon, while heating oil gained 6.41 cents to close at $1.7267 a gallon. Natural gas futures were even at $7.45 per 1,000 cubic feet.
Oil prices had already started the day higher as persistent concerns over Nigerian supply disruptions and Iran's nuclear program overshadowed U.S. government data showing gains in domestic crude supplies.
Oil prices spiked earlier in the week on news that Nigerian militants had attacked a pipeline switching station operated by Royal Dutch Shell PLC and a boat they claimed housed Nigerian military personnel. That, and an earlier attack, has forced Shell to halt the flow of about 455,000 barrels a day.
Nigeria is Africa's leading oil exporter and the United States' fifth-largest supplier, usually exporting 2.5 million barrels daily.
Traders also remain concerned over the situation in Iran, which has offered the International Atomic Energy Agency, the U.N. nuclear watchdog, information on a secret project that U.S. intelligence has linked to a possible nuclear arms program, two diplomats said Thursday.
Iran is the second-largest oil producer in the Organization of Petroleum Exporting Countries, and analysts worry that sanctions or any other actions the West might take against Tehran could disrupt the flow of oil there.
On May 1, 2004, attackers stormed the offices of a Houston-based oil company in the western Saudi oil hub of Yanbu, killing six Westerners and a Saudi before security forces killed the attackers. Several weeks later, al-Qaida-linked gunmen stormed oil company compounds in Khobar, on the eastern coast, and took hostages. Twenty-two people, 19 of them foreigners, were killed before the siege ended.