Saturday’s drone attacks on Saudi Arabia's oil industry have thrown a spotlight on the pace of the energy transition in the Middle East just a week after Saudi Aramco’s chief executive questioned how swiftly oil producers in the region would increase their focus on cleaner forms of energy.
Speaking at the World Energy Congress in Abu Dhabi last week, Amin Nasser emphasised the need for the oil and gas industry to respond boldly to the challenge of climate change by driving down its own emissions as much as possible.
However, he also argued against suggestions that there will be a rapid transition away from oil and gas, saying that it will remain at the heart of the global energy mix for decades to come.
A few days later, drone attacks on Aramco’s facilities in Abqaiq and Khurais raised the prospect of a major supply shock in the market as they cut output by 5.7 million barrels per day, which equates to 7% of current global crude and condensate production.
After spiking to levels not seen in years, oil prices fell midweek to near pre-attack levels after the newly-installed Saudi Energy Minister Prince Abdulaziz bin Salman said the kingdom had restored oil supplies to customers at the level they were at before the attacks by drawing from its inventories.
A return to full capacity is expected by the end of September, while output is targeted to reach 9.8 million bpd in October, bringing them back to August levels.
However, scepticism remains over the timeline given for the restart as some Saudi officials have said restoration efforts would take longer, with some analysts eager to dampen some of the more optimistic expectations.
While it remains to be seen how quickly supplies will be restored - and how prices will react - the attacks also raised political tensions that could be more difficult to restore in a region already on edge.
Yemen's Houthi forces, who have been locked in a war with a Saudi-United Arab Emirates-led coalition since 2015, claimed responsibility for the attacks, warning Saudi Arabia that their targets “will keep expanding”.
However, Saudi Arabia said it has evidence linking Iran to the attacks and released remnants of drones and missiles it said were used in attacks .
The US had already said it believed the attacks originated in southwest Iran, and US President Donald Trump said Washington was “locked and loaded” to retaliate.
Iran denied any involvement, although it said it was ready for “full-fledged war”.
By Wednesday, Trump said on Twitter he had “ instructed the Secretary of the Treasury to substantially increase s anctions on the country of Iran! ”.
As tensions simmer, questions remain over Saudi Arabia’s long-term role as the world’s reliable swing producer - conflicts in the Middle East invariably extend beyond regional borders, impinging on energy-hungry economies such as China, South Korea, Japan and India.
Reports have already pointed to China turning to the US for imports in the face of constrained Saudi output, despite the ongoing trade war between the two nations, while India is said to be boosting Russian imports.
While the attacks may bring positive developments in the short-to-medium-term for oil producers other than Saudi Arabia – and potentially US tight oil – they could also hasten a transition to cleaner forms of energy that may been seen as less exposed to geopolitical risk.