OPINION: The unprecedented attacks that punched a heavy hole in the heart of the Saudi oil industry are threatening a wider regional conflict involving the US and Iran.

Such a scenario would have a disastrous effect on the world economy, especially in energy-hungry China, Japan and India, as the Persian Gulf region accounts for more than 20% of global oil supplies.

Tehran and Washington have traded barbed words in the wake of the Saturday pre-dawn drone attacks blamed on the Islamic Republic.

US President Donald Trump said "there is reason to believe" that the White House knows the culprit of the attack, and that the military is "locked and loaded" to take action.

The US is "waiting to hear" from Riyadh "as to who they believe was the cause of this attack, and under what terms we would proceed".

Trump's warning followed a National Security Council meeting at the White House that included Vice President Mike Pence, Secretary of State Mike Pompeo and Defense Secretary Mark Esper.

Iran has dismissed the US allegations as baseless, with its normally sober-headed Foreign Minister Mohammad Javad Zarif foregoing diplomatic niceties to accuse the Trump administration of resorting to "maximum lying" after failing in its policy of bringing Iran to its knees through maximum economic pressure.

US sanctions are bleeding the Iranian oil industry to death, leading Tehran to vow to stop oil exports from other regional producers if it is deprived of its own sales.

Foreign Ministry spokesman Abbas Mousavi said the US allegations over the attack on the Abqaiq and Khurais oil processing facilities were meant to justify "actions" against Iran.

"Such remarks are more like plotting by intelligence and secret organisations to damage the reputation of a country and create a framework for future actions," said Mousavi.

Iran-aligned Houthi rebels in Yemen say they carried out the drone attacks in retaliation for a brutal Saudi-led military campaign in their impoverished country, which had led to widespread death and destruction.

Pompeo, however, said there is "no evidence the attacks came from Yemen".

Senior US officials have cited intelligence assessments, including satellite imagery, to support their case that Iran was responsible.

The Iranian military says it is prepared to take on the US.

In fact, a low-profile conflict has been raging just below the surface in recent months, in part encouraged by a belief among Tehran's clerical leadership that Washington cannot stomach another war following its unpopular and largely failed military campaigns in Afghanistan and Iraq.

There has been a spate of mysterious attacks on oil tankers in the Persian Gulf in recent months, with the US pointing the finger of blame at Iran while beefing up its military presence in the region.

Tensions have been mounting since May last year when Trump pulled out of a 2015 multilateral deal that promised Iran relief from sanctions in return for curbs on its nuclear programme.

Iran, which has responded by rolling back its commitment on nuclear safeguards intended to prevent it from making bombs, says it is ready to go to war.

In a not-so-subtle threat, the commander of the Islamic Revolutionary Guard Corps' aerospace arm noted Iran's missiles could hit US bases and ships within a range of 2000 kilometres.

"Because of the tension and sensitive situation, our region is like a powder keg," Brigadier-General Amir Ali Hajizadeh said.

"Neither us nor the Americans want a war. When these contacts come too close, when forces come into contact with one another, it is possible a conflict happens because of a misunderstanding," said Hajizadeh.

"Of course some forces facing each other in the field could do something by which a war could start. We have always prepared ourselves for a full-fledged war."

A full-blown regional war is a possibility with incalculable consequences as the region’s vital oil installations -- acting as the lifeblood of the world economy -- are within easy Iranian and US missile and aerial strikes.

The drone attacks on the Saudi oil installations are an example of the threats posed.

(This is an Upstream opinion article.)