Houthi missile attack hits Aramco headquarters in Dhahran; Brent near US$107

A missile attack by Yemen's Houthi movement hit Saudi Aramco's headquarters complex in Dhahran, eastern Saudi Arabia, on Tuesday 13 October, according to Bloomberg and Reuters. It is the latest in a week of Houthi strikes on Saudi airports and energy sites, and oil prices edged up again on Wednesday.

Bloomberg, in a report carried by World Oil, said the Dhahran headquarters was hit during a Houthi missile attack, causing a fire in part of the complex, according to people with knowledge of the matter. One person said the fire had been put out. Bloomberg said the extent of the damage was not clear and it could not immediately be established whether the impact came from debris from intercepted missiles. Aramco and the Saudi energy ministry did not immediately respond to Bloomberg.

Reuters, in a report carried by GV Wire, said a company source told it an office tower in the Dhahran complex was struck on Tuesday night and its top three floors were damaged. Reuters reported that Aramco had made no official comment. The Saudi-led coalition said Houthi missiles targeted several Saudi cities on Tuesday, including Riyadh and Dhahran, and that fragments from an interception fell on part of a residential area in Dhahran.

Bloomberg reported that the wave of Houthi attacks on Saudi Arabia in recent days has also targeted airports around the country and left at least 18 people dead and hundreds injured. It said a refinery at Jazan has been shut since an earlier attack, a key oil export port on the Red Sea coast has been targeted, and a cross country pipeline that has been Aramco's main route to world markets was temporarily shut last month after an attack launched from Iraq.

Reuters reported that Houthi spokesperson Yahya Saree promised a "harsh and painful" response to Saudi-led strikes on Sanaa, and that the Houthis warned oil workers in Saudi Arabia to stay away from possible targets. The coalition said it struck a Yemen Petroleum Company fuel depot on the outskirts of Sanaa. Reuters said Saudi Arabia resumed its Yemen campaign after the Houthis advanced down the Red Sea coast towards Bab el-Mandeb last month, and that a government offensive has since pushed them back from the strait area. Washington has so far declined Saudi requests to join the war directly, and Iran's foreign minister has offered to mediate, according to Reuters.

On markets, Trading Economics reported that Brent crude rose to US$106.68 a barrel on 14 October, up 0.94% on the day and about 72% higher than a year ago, as hostilities between Saudi Arabia and the Houthis raised supply concerns. It also reported that Iran has stepped up attacks on tankers in the Strait of Hormuz, while the US said it had helped more than 19 million barrels of crude pass through the waterway. Ship & Bunker data showed Singapore VLSFO bunker fuel at US$907 a tonne on 13 October, up US$14.50 on the day.

Saudi Arabia's Red Sea export routes and pipeline have become more important because, as Reuters noted, Iran closed the Strait of Hormuz in February. Attacks on Saudi energy sites on both coasts add to the risk around the two sea lanes that matter most for Sri Lanka's trade with the Gulf, Europe and the Suez route: Hormuz and Bab el-Mandeb.

For importers, higher crude and bunker prices tend to flow into carrier fuel surcharges and local fuel costs. For shippers using Gulf hubs or air cargo through Saudi airports, the airport attacks have already disrupted flights, as covered in our post on the Riyadh airport attack and SriLankan flights. War risk premiums on Red Sea transits were discussed in our post on the Suez return and cargo insurance.

The damage reports are early and differ between sources, and there was no official Aramco statement in the reports we read.

• Ask carriers and forwarders whether any emergency, war risk or bunker surcharges are planned for sailings via the Red Sea or Saudi ports.
• Check that cargo insurance covers war and strikes risks for routings that pass Bab el-Mandeb or call at Gulf ports.
• For air cargo moving through Saudi Arabia or nearby hubs, confirm routings and transit times with your agent before booking.
• Track Brent and bunker prices, as these feed into fuel surcharges with a lag.
• Allow extra time in delivery promises for Middle East and Europe bound shipments while the situation is unsettled.