Last night, AlertsUSA subscribers were notified of reports of explosions and gunfire at the Saudi Aramco Abqiaq oil refinery in eastern Saudi Arabia. Iran-backed Houthis militants have claimed responsibility for the attacks which were carried out using explosive-laden drones. The fires at Abqaiq in Buqayq, which contains the world's largest oil processing facility, and Khurais, which contains the country's second largest oilfield, resulted in significant damage.

Secretary of State Mike Pompeo blamed Tehran for what he called "an unprecedented attack on the world’s energy supply," contradicting Houthi claims they were behind attacks.

The Wall Street Journal is reporting that Saudi Arabia is shutting down approximately 50% of its oil output following the attacks. The production shutdown amounts to a loss of about five million barrels per day, or roughly 5% of the world’s daily production of crude oil. Saudi Arabia produces 9.8 million barrels per day.

This evening, the Department of Energy announced they stand ready to "deploy resources from the Strategic Petroleum Oil Reserves if necessary to offset any disruptions to oil markets as a result of this act of aggression."

While Aramco authorities state they can restore output quickly, global oil markets are looking at a production shortfall of as much as 150 million barrels monthly. One obvious result will be significantly higher oil prices, in turn, likely resulting in higher gas prices at the pump.

If additional attacks are carried out on Gulf region oil facilities, the problem could be compounded greatly.