Fears for oil prices after lethal Saudi attack

Saudi Arabia sought to reassure foreign oil executives – and prevent a dramatic rise in crude prices – after the lethal attack on two compounds housing offices and homes of expatriates working in the country’s most important industry.

The weekend rampage by gunmen that killed 22 people in the Saudi city of Khobar was the second such attack in less than a month.

Saudi officials were worried that the attack – in which British oil company executive Michael Hamilton, 18 other foreigners and three Saudis died – might inflame fears about political stability and drive oil prices higher.

“There’s bound to be a bump in prices,” said Yasser Elguindi of New York-based Medley Global Advisors.

However, the three-day weekends in the United States and Britain should give markets more time to digest the events in Saudi Arabia and help temper any panicked response, he said.

In spite of the ferocity of the attacks in Khobar, oil companies are used to dealing in environments that are hostile and threatening, such as parts of Africa and Central Asia.

Analysts said the attack and seizure of hostages in Khobar was unlikely to trigger a mass departure of expatriates from the kingdom.

The US Embassy in Saudi Arabia reiterated a call to its citizens to leave the kingdom.

British Ambassador Sherard Cowper-Coles said the British government had adjusted its own travel advisory to reflect what happened, but said: “We are not advising them to leave the kingdom.”

Helicopter-borne Saudi commandos drove al-Qaida militants from the expatriate housing complex in the kingdom’s oil hub, ending the shooting and hostage-taking spree.

It was the worst terror attack on Saudi soil in a year. A statement attributed to al-Qaida’s chief in the Saudi region said the violence aimed to punish the kingdom for its oil dealings with the United States and to drive “crusaders” from “the land of Islam”.

The 25-hour rampage started on Saturday morning when militants dressed in military-style uniforms opened fire inside two oil industry office compounds and engaged in a shootout with Saudi guards.

They then moved up the street to the Oasis, an upscale resort and residence with apartments, villas and hotels, where they took 45-60 hostages.

Saudi security stormed the building early yesterday after they found that the hostages were being harmed, said Jamal Khashoggi, an adviser to Saudi Arabia’s embassy in London.

The commandos freed 41 hostages, but only one of the four attackers was captured and the others escaped.

The Interior Ministry said the arrested militant, who was wounded, was the ringleader of the assault and “an important target". One of the fugitives also was wounded.

In Washington, a spokesman for the Saudi Embassy, Nail al-Jubeir, told CNN that the attackers hoped to cripple the Saudi and world economy.

“The intent (of the attack) was to cripple the world economy by sending the message that foreigners are not safe inside Saudi Arabia,” he said, but dismissed any notion that the kingdom cannot protect its people.