Trump says US locked and loaded in response to drone attack

Tensions are flaring in the Gulf after President Donald Trump tweeted on Monday the US is "locked and loaded" to respond to a weekend drone assault on two Saudi Arabia oil sites that his aides blamed on Iran.

The Saturday night attack, which halved the kingdom's oil production and sent crude prices spiking, led Trump to authorise the release of US strategic reserves should they be necessary to stabilise markets.

Trump said the US had reason to believe it knew who was behind the attack his secretary of state had blamed Iran the previous day and said his government was waiting to consult with the Saudis as to who they believe was behind the attack and "under what terms we would proceed!"

The tweets on Sunday followed a National Security Council meeting at the White House and hours after US officials offered what they said was proof that the attack was inconsistent with claims of responsibility by Yemen's Iran-backed Houthi rebels and instead pointed the finger directly at Tehran.

A US official said all options, including a military response, were on the table but added that no decisions had been made. The official spoke on the condition of anonymity to discuss the internal deliberations.

Iran called the US claims "maximum lies" and threatened American forces in the region. 

The attack dimmed hopes for potential nuclear talks between Trump and Iranian President Hassan Rouhani at the UN General Assembly this week.

Fired from?

The US government produced satellite photos showing what officials said were at least 19 points of impact at two Saudi energy facilities, including damage at the heart of the kingdom's crucial oil processing plant at Abqaiq. 

Officials said the photos show impacts consistent with the attack coming from the direction of Iran or Iraq, rather than from Yemen to the south.

Iraq denied that its territory was used for an attack on the kingdom. 

US officials said a strike from there would be a violation of Iraq's sovereignty.

The officials said additional devices, which apparently didn't reach their targets, were recovered northwest of the facilities and are being jointly analysed by Saudi and US intelligence. 

The US officials, who spoke on condition of anonymity to discuss intelligence matters, did not address whether the drone could have been fired from Yemen, then taken a round-about path, but did not explicitly rule it out.

Powder keg of a region

The attacks and recriminations are increasing already heightened fears of an escalation in the region after a prominent US senator suggested striking Iranian oil refineries in response to the assault, and Iran warned of the potential of more violence.

"Because of the tension and sensitive situation, our region is like a powder keg," Iranian Brigadier General Amir Ali Hajizadeh said. "When these contacts come too close, when forces come into contact with one another, it is possible a conflict happens because of a misunderstanding."

Actions on any side could break into the open a twilight war that's been raging just below the surface of the wider Gulf in recent months. 

Already, there have been mysterious attacks on oil tankers that America blames on Tehran, at least one suspected Israeli strike on Shia forces in Iraq, and Iran shooting down a US military surveillance drone.

Oil interrupted

The attack on Saudi Arabia's Abqaiq plant and its Khurais oil field led to the interruption of an estimated 5.7 million barrels of the kingdom's crude oil production per day, equivalent to more than 5 percent of the world's daily supply.

It remains unclear how King Salman and his assertive son, Crown Prince Mohammed bin Salman, will respond to an attack targeting the heart of the Saudi oil industry.

Crude oil futures shot up 9.5 percent to $60 as trading opened Sunday evening in New York, a dramatic increase. 

Saudi Arabia has promised to fill in the cut in production with its reserves, but has not said how long it will take to repair the damage. 

The Wall Street Journal cited Saudi officials as saying a third of output would be restored on Monday, but a return to full production may take weeks.

In Washington, Trump said he had approved the release of US strategic petroleum reserves "if needed" to stabilise energy markets. 

The president said the final amount of the release, if any, would be "sufficient to keep the markets well-supplied."

Iranian Foreign Ministry spokesman Abbas Mousavi dismissed the US allegation of responsibility as "blind and futile comments."

"The Americans adopted the 'maximum pressure' policy against Iran, which, due to its failure, is leaning toward 'maximum lies,'" Mousavi said in a statement.

Houthi leader Muhammad al Bukhaiti reiterated his group's claim of responsibility, telling The Associated Press it exploited "vulnerabilities" in Saudi air defences to strike the targets.

He did not elaborate.

Iran, meanwhile, kept up its own threats. Hajizadeh, the brigadier general who leads the country's aerospace program, said in an interview published across Iranian media on Sunday that Revolutionary Guard forces were ready for a counterattack if America responded, naming the Al Udeid Air Base in Qatar and Al Dhafra Air Base near Abu Dhabi in the United Arab Emirates as immediate targets, as well as US Navy ships in the Gulf and the Arabian Sea.

"Wherever they are, it only takes one spark and we hit their vessels, their air bases, their troops," he said in a video published online with English subtitles.

Trump insisted that unspecified conditions must be met before he would sit down with the Iranian leader, apparently rejecting the comments of two top advisers.

"The Fake News is saying that I am willing to meet with Iran, 'No Conditions.' That is an incorrect statement (as usual!)." In fact, Treasury Secretary Steven Mnuchin said last week that "the president has said that he is prepared to meet with no conditions."

And Pompeo had told reporters days earlier that "the President has made clear he is happy to take a meeting with no preconditions."

Iran has said it was unwilling to meet with Trump while crushing sanctions the American leader imposed on Tehran after unilaterally withdrawing from the 2015 nuclear accord over a year ago remain in place.