Oil Prices Jump After Attack on Saudi Facilities

Here is today’s Foreign Policy brief: The United States blames Iran for the attack on a key Saudi oil facility, Turkey hosts a summit over Syria, and what to watch in the world this week.

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After an attack on Saudi oil facilities over the weekend, the United States has laid the blame squarely on Iran—and not Yemen’s Houthi rebels, who have claimed the strike, which has disrupted global oil supplies. A U.S. official told Reuters that 19 targets were hit—most at Saudi Aramco’s Abqaiq facility. On Sunday, oil prices rose sharply on the news, initially jumping 20 percent from $60 to nearly $72 per barrel, before settling at around $65 per barrel early Monday—an 8 percent rise.

Abqaiq processes around 7 million barrels a day, or roughly 7 percent of the world’s crude output, FP’s Keith Johnson explains. U.S. Secretary of State Mike Pompeo called the strike an “unprecedented attack on the world’s energy supply.” U.S. officials have dismissed the possibility that the Houthis had the capacity to conduct such a long-range strike.

Was Iran involved? The attack follows others this year by the Houthis against Saudi Arabia’s oil industry, and it shows how vulnerable the state-owned Saudi Aramco is to regional conflict. But U.S. officials allege that both the direction of the strikes and the weapons used—possibly cruise missiles—suggest that they were launched from Iran or Iraq. Iran denies the attacks, and Iraq denies that its territory was used to carry them out.

What does it mean for U.S.-Iran talks? It’s not clear yet. On Sunday, the White House said that despite accusing Iran of being involved in the attacks, it had not ruled out the possibility of a meeting between U.S. President Donald Trump and Iranian President Hassan Rouhani at the U.N. General Assembly next week in New York.

Market volatility. Analysts have warned that oil prices could remain volatile until the scale of the disruption—and how long it will last—becomes clear. It could take weeks for Saudi Arabia’s supply to return to full capacity, Reuters reports. In the meantime, Trump has authorized the use of U.S. emergency oil reserves if necessary to stabilize global supply.

A Syria summit in Ankara. The leaders of Turkey, Russia, and Iran will meet today in attempt to secure a lasting ceasefire in northwest Syria. In the country’s eight-year civil war, Russian President Vladimir Putin and Iran’s Rouhani have supported Syrian President Bashar al-Assad, while Turkish President Recep Tayyip Erdogan has backed rebel groups. Government forces have regained territory in the northwest in recent months but remain engaged in conflict against rebel factions in Idlib.

Boris Johnson meets with EU. British Prime Minister Boris Johnson travels to Luxembourg today for a meeting with European Commission President Jean-Claude Juncker. Johnson is expected to defy Parliament’s new law, refusing to discuss any extension of the current Brexit deadline of Oct. 31—even if a deal is not reached. Johnson said on Sunday that negotiating a deal with the European Union remains his intent, but EU leaders remain pessimistic—particularly over concerns about the Irish border.

No official winners in Tunisia. Though no official results have been announced in Tunisia’s presidential election, two political outsiders—lawyer Kais Saied and media mogul Nabil Karoui—say that exit polls show that they have advanced to the second round. Low turnout in the election—only the second since the 2011 Arab Spring uprising—seemed to reflect growing disillusionment with the country’s politics.

Bahrain’s Crown Prince Salman bin Hamad al-Khalifa meets Trump today in Washington, where counterterrorism and maritime security in the Persian Gulf will be on the agenda.

Officials from 26 central banks meet Facebook representatives today in Basel as concerns grow within Europe over Facebook’s new cryptocurrency, Libra, and the threats it poses to financial markets. U.S. Federal Reserve and Bank of England officials will attend.

Israel holds its second election in six months on Tuesday—a contest that polls are projecting to be close, with Prime Minister Benjamin Netanyahu’s Likud party nearly tied with the centrist Blue and White party. On Sunday, Netanyahu held a cabinet meeting in the West Bank’s Jordan Valley, which he has pledged to annex if he wins—a move that excites right-wing voters but could have unintended consequences and eventually pave the way for a multinational one-state solution in the future, argues Ian Lustick in FP.

Investors predict the U.S. Federal Reserve will announce another interest rate cut after its meeting on Tuesday and Wednesday in Washington. In July the central bank cut rates for the first time in a decade, leading others around the world to follow suit. The European Central Bank announced a rate cut last week.

Germany is expected to reveal a long-awaited climate package on Friday with a plan to reduce emissions significantly by 2030. Chancellor Angela Merkel’s government is under pressure to prove its commitment to combating climate change without placing a large burden on the country’s slowing economy.

Trump hosts Australian Prime Minister Scott Morrison for a state dinner on Friday—the first Australian leader to receive the honor since 2006. It will be just the second state dinner Trump has held since taking office. The two met on the sidelines of the G-7 summit in August.

World leaders will soon convene in New York for the 74th U.N. General Assembly, and from Sept. 23 to 27, Foreign Policy will publish a one-week-only newsletter devoted to on the ground coverage and in-depth analysis of the goings-on at UNGA. Sign up here for U.N. Brief, written by FP’s Colum Lynch and Robbie Gramer.

The end of the Salvini era? Over the weekend, 82 migrants disembarked in Italy from a Mediterranean rescue boat—the first time it’s been allowed this year. The move follows an agreement between the European Union and Italy’s new government, which allows for the relocation of migrants to other EU states. The coalition also has plans to roll back League leader Matteo Salvini’s hardline immigration policies—something Salvini promises to challenge.

Islamist violence in West Africa. Political leaders in West Africa pledged $1 billion over the weekend to counter Islamist militants throughout the region and particularly in Mali and Burkina Faso, where they have stoked local violence. Supported by France, five countries—Burkina Faso, Niger, Chad, Mali, and Mauritania—launched a counterinsurgency task force in 2017, but it has remained underfunded.

Canada’s Greens. Climate change is a key issue for voters ahead of Canada’s October elections. Polls show that the country’s Green Party has tripled its support—to 11 percent of the public—and could be necessary to form a coalition. If that’s the case, it could push the government further toward policies favoring renewable energy and away from its support of the oil industry.

The European jihadis on trial in Iraq. European governments are reluctant to repatriate former Islamic State militants and the public is, too. But some militants surrendered in Syria in the hopes of returning to Europe. Now, they are being transferred, tried, and convicted in Iraqi courts—with some sentenced to death, Pilar Cebrián reports for FP.

Over the weekend, a toilet made of solid gold was stolen from Britain’s Blenheim Palace, the birthplace of Winston Churchill. The toilet, designed by the Italian artist Maurizio Cattelan, was previously displayed at the Guggenheim Museum in New York. It is part of a U.K. exhibition of his controversial work that had just opened.

That’s it for today. 

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