Spike in gas prices expected to be short-lived, analyst says

US Secretary of State Mike Pompeo meets with Crown Prince Muhammad Bin Salman in Jeddah on Wednesday. — Reuters

Iran denies being involved in the attack claimed by Yemeni rebels, and has threatened the U.S. that it will retaliate "immediately" if Tehran is targeted in response.

Gas and oil production accounts for almost half of Saudi Arabia's GDP.

With that said, the next question is how Saudi Arabia, and perhaps the United States, might respond.

Iranian officials denied the country was responsible for the attacks, and Yemen's Iran-aligned Houthi rebels said they launched the drones that hit the Abqaiq processing plant, which is considered the largest in the world, along with the Khurais oilfield.

However, the Saudi Defence Ministry said it will hold a news conference on Wednesday to present "material evidence and Iranian weapons proving the Iranian regime's involvement in the terrorist attack".

"Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world's energy supply".

Denouncing the attack, French President Emmanuel Macron said that his country will send its experts to help investigate the drone attacks on the oil facilities.

"The attack was launched from the north and was unquestionably sponsored by Iran", Malki told journalists.

Trump and Saudi officials have stressed the need for caution in their response to the attacks.

Announcing Mer Pompeo's departure, US Vice President Mike Pence said: "As the president said, we don't want war with anybody but the United States is prepared".

Saudi Arabia's Crown Prince Mohammed bin Salman said the hit on the world's biggest crude exporter was a "real test of the global will" to confront subversion of the worldwide order.

Iran sent a note to the USA via Swiss diplomats in Tehran on Monday, reiterating that Tehran denies being involved in the Saudi attack, IRNA reported.

US Secretary of State Mike Pompeo is greeted by Crown Prince Muhammad Bin Salman in Jeddah on Wednesday. — Reuters
US Secretary of State Mike Pompeo is greeted by Crown Prince Muhammad Bin Salman in Jeddah on Wednesday. — Reuters

The Islamic Republic dismissed the allegations.

They did not hit the Sanaa bazaar. The confrontation has sporadically convulsed the Gulf, with the strikes on oil tankers, an American drone and a key pipeline, pushing the region to the brink of open conflict. "Who started the conflict?" he said, blaming Washington and its Gulf allies for war in Yemen.

An adviser to Rouhani, Hesameddin Ashena, said on Twitter the Saudi press conference indicated that Riyadh knows nothing about where the attack came from.

Yemen's Iran-aligned Houthi movement, which has been battling a Saudi-led military coalition, has claimed responsibility for the strikes.

"By sending your secretary of state, it nearly implies that you're leaning more toward diplomatic solutions to this issue", Joseph Westphal, a former US ambassador to Saudi Arabia, told CBS News.

In the wake of Saturday's attack on Saudi Arabia's main oil production facility, Iran's leaders find themselves in what must feel like an unfamiliar position.

But the spokesman stopped short of directly accusing Iran of launching the attack from its own soil - something recently implied by US officials.

France, which is trying to salvage an global nuclear deal with Iran that Washington quit a year ago, said it wanted to establish the facts before reacting. Iran has rejected United States claims it was behind the strikes.

His decision not to opt for a military response - at least initially - represents a departure from initial fiery rhetoric against Iran for what the US considers its provocative attack.

A top Saudi source, as per Reuters, claimed that the production could be fully restored within two to three weeks and that the kingdom was close to restoring 70 per cent of the 5.7 million barrels that were lost in the attacks.

Brent prices had jumped 14.6% on Monday, the contract's biggest one-day percentage gain since at least 1988.

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