Saudi Arabia says Yemen rebels target its energy facilities

Aramco, also known as the Saudi Arabian Oil Co., released its earnings report on the heels of weeks of intense volatility in energy markets triggered by Russia’s invasion of Ukraine. Punitive sanctions on Russia, among the world’s largest exporters of crude and petroleum products, have added to turmoil to an already-tight energy market.

The international oil benchmark Brent crude hovered over $107 on Sunday after nearly touching a peak of $140 earlier this month. Saudi Arabia and the United Arab Emirates have so far resisted Western appeals to increase oil production to offset the loss of Russian oil as gasoline prices skyrocket.

Yehia Sarie, a spokesman for Yemen’s Iran-backed Houthi rebels said the group had launched “a wide and large military operation into the depth of Saudi Arabia,” without immediately elaborating.

The Saudi-led military coalition said it thwarted an attack on a liquified gas plant at a petrochemicals complex in the Red Sea port of Yanbu run by Aramco.

Other aerial strikes targeted a power station in the country’s southwest, a desalination facility in Al-Shaqeeq on the Red Sea coast, an Aramco terminal in the southern border town of Jizan and a gas station in the southern city of Khamis Mushait, the coalition said.

The extent of damage on Saudi infrastructure and energy facilities remained unclear. The official Saudi Press Agency posted various photos of firetrucks dousing leaping flames with water hoses, as well as wrecked cars and craters in the ground allegedly left by the drone and ballistic missile strikes.

The barrage comes days after the Saudi-based Gulf Cooperation Council said it invited Yemen’s warring sides for talks in Riyadh aimed at ending the war — an offer dismissed out of hand by the Houthis, who demanded that negotiations take place in a “neutral” country.

Peace talks have floundered since the Houthis have tried to capture oil-rich Marib, one of the last remaining strongholds of the Saudi-backed Yemeni government in the country’s north.

Yemen’s brutal war erupted in 2015, after the Iran-backed Shiite Houthis seized the country’s capital, Sanaa, and much of the north. Saudi Arabia and other Arab states launched a devastating air campaign to oust the Houthi threat and restore the internationally recognized government.

But as the conflict now grinds into its eight year, the violence has only intensified. The war has created one of the worst humanitarian crises in the world and largely settled into a stalemate, with Saudi Arabia and its allies struggling to turn the tide. Coalition airstrikes have decimated infrastructure and struck civilian targets in Yemen like hospitals and wedding parties, drawing widespread international criticism.

Repeated cross-border Houthi attacks meanwhile have targeted the kingdom’s key oil refineries and export terminals. Although rarely causing substantial damage, the strikes on Aramco sites have rattled world energy markets and raised the risk of disruptions to Saudi output.

As part of its yearly report, Aramco said it stuck to its promise of paying quarterly dividends of $18.75 billion — $75 billion last year — due to commitments the company made to shareholders in the run-up to its initial public offering. Nearly all of the dividend money goes to the Saudi government, which owns more than 98% of the company.

Despite Saudi Crown Prince Mohammed bin Salman’s efforts to diversify the Saudi economy away from oil, the kingdom remains heavily dependent on oil exports to fuel government spending.

The low oil prices of recent years have stung Aramco, forcing the kingdom to scale back its spending on projects and subsidies. But riding on its 2021 income surge, Aramco said on Sunday that it expects to raise its capital expenditure to between $40 and $50 billion this year, a substantial increase from last year’s spending of $31.9 billion.

“Although economic conditions have improved considerably, the outlook remains uncertain due to various macro-economic and geopolitical factors,” said Aramco President and CEO Amin H. Nasser.

Aramco shares were up over 3% on Sunday to trade around 43 riyals ($11.50) a share on Riyadh’s Tadawul stock exchange.