Half of lost Saudi oil to remain offline for a month

Around three million barrels per day of Saudi oil will remain offline for a month, about half the production halted by the weekend's devastating attacks on key crude facilities, S&P Platts said on Tuesday.

The report came as oil prices dipped slightly following record gains on Monday as uncertainty prevailed on global markets over when the OPEC kingpin will be able to restore lost production.

Strikes on Abqaiq — the world's largest processing plant -- and the Khurais oilfield that the US has blamed on Iran have knocked out 5.7 million barrels per day (bpd), or six percent of global production.

"At this point, it looks likely that around 3.0 million bpd of Saudi Arabian crude supply will be offline for at least a month," S&P Global Platts said in a report.

Saudi Energy Minister Prince Abdulaziz Bin Salman is scheduled late Tuesday to hold his first press conference since the attacks, with the expectation that he will give an update on efforts to restore lost production.

Riyadh pumps some 9.9 million bpd of which around 7.0 million bpd are exported, mostly to Asian markets.

"Saudi Arabia will likely say that they can fully supply their customers, although as time goes on this may be challenging. Any indication of delays or supply tightness will lead to further price increases in the weeks/months ahead," S&P said.

The threat of a prolonged supply outage from Saudi Arabia highlights the lack of spare production capacity in the market, estimated at 2.3 million bpd, most of it held by Riyadh, the energy news provider said.

US President Donald Trump said on Monday that Iran was likely behind strikes on Saudi oil facilities, but that he wanted to be sure and he hoped to avoid war.

"It is certainly looking that way at this moment," Trump told reporters when asked if he believes Tehran carried out the attack.

The president said "we pretty much already know" and "certainly it would look to most like it was Iran" but that Washington still wanted more proof.

"We want to find definitively who did this," Trump told reporters in the Oval Office, where he was meeting with Bahrain's Crown Prince Salman Bin Hamad bin Isa Al-Khalifa.

"You're going to find out in great detail in the near future," he said. "We have the exact location of just about everything.

"With all that being said, we'd certainly like to avoid" war, Trump said.

Damage at the Abaqaiq oil processing facility in Buqyaq, Saudi Arabia. AP

"I don't want war with anybody but we're prepared more than anybody," he added.

The weapons used to strike Saudi oil facilities were Iranian-made, the Riyadh-led coalition said on Monday, heightening fears of regional conflict after the US hinted at a military response to the assault.

The weekend strikes on Abqaiq — the world's largest oil processing facility -- and the Khurais oil field in eastern Saudi Arabia have roiled global energy markets sending prices spiking Monday.

Yemen's Iran-aligned Houthi rebels claimed responsibility for the strikes but Washington has squarely blamed Iran, with President Donald Trump saying the US is "locked and loaded" to respond.

Saudi's energy infrastructure has been hit before, but this strike was of a different order, abruptly halting 5.7 million barrels per day (bpd) or about six percent of the world's oil supply.

The Saudi-led coalition, which is bogged down in a five-year war in neighbouring Yemen, reiterated the assessment that the Houthis were not behind it, pointing the finger at Iran for providing the weapons.

Russia urged "all countries to avoid hasty steps or conclusions that could exacerbate the situation" while the European Union stressed all sides should show "maximum restraint".

China also called on the US and Iran to "exercise restraint... in the absence of a conclusive investigation or verdict."

"All indications are that weapons used in both attacks came from Iran," coalition spokesman Turki Al-Maliki told reporters in Riyadh, adding they were now probing "from where they were fired".

"This strike didn't come from Yemen territory as the Houthi militia are pretending," Maliki said, adding an investigation had been opened.

A general view of Riyadh.

He labelled the Houthis "a tool in the hands of the Iranian Revolutionary Guards and the terrorist regime of Iran."

The rebels said they fired 10 drones at the Saudi infrastructure, but the New York Times reported that US officials had satellite images showing the attacks -- possibly with drones and cruise missiles -- had come from the north or northwest.

That indicated they were sourced in the northern Arabian Gulf, Iran or Iraq, rather than Yemen.

US President Donald Trump failed to specify who the US intelligence agencies believe was behind the attacks.

Yemen's Houthi rebels, which are backed by Iran, have claimed responsibility for the attacks.

The Shia militia has been engaged in a protracted civil war against the internationally-recognised Yemeni government, which has the military support of a Saudi-led coalition.

On Saturday, US Secretary of State Mike Pompeo directly blamed Iran and said there was no evidence to suggest that the attacks were actually carried out from Yemen.

Authorities in Saudi Arabia were still investigating the attack and have yet to identify a culprit.

The Iranian government, meanwhile, on Sunday denied any involvement.

The attack came amid speculation that Trump could meet with the Iranian president, Hassan Rouhani, on the sidelines of the upcoming United Nations' General Assembly set to be held in New York City at the end of the month.

In a subsequent tweet, Trump again railed against media reports of this possible diplomatic thaw.

"The Fake News is saying that I am willing to meet with Iran, 'No Conditions,'" he said. "That is an incorrect statement (as usual!)."

Trump also tried to use his favourite social media platform — where he has 63 million followers — to calm the markets down.

"PLENTY OF OIL!" he said in a succinct three-word tweet.

On Sunday, the barrel of Brent crude was trading at $70.98 in the New York futures market, an increase of 18 per cent compared to Friday's closing, when it stood at $60.15 per barrel.

Agencies