Crude oil prices could see high levels if a conflict with Iran is not thwarted, Saudi Arabia's Crown Prince Mohammed bin Salman warned after drone attacks on his country's key oil facilities.
"If the world does not take a strong and firm action to deter Iran, we will see further escalations that will threaten world interests," bin Salman told U.S. network CBS's 60 Minutes program in an interview.
"Oil supplies will be disrupted and oil prices will jump to unimaginably high numbers that we haven't seen in our lifetimes," he added.
The drone attacks on the kingdom's crown jewel Saudi Aramco on Sept. 14 crippled 5.7 million barrels per day (mbpd) of production, which was around 60% of output in Saudi oil industry.
Due to supply worries in global oil market, crude prices soared 14% on Sept. 16 -- their biggest daily gain since the Gulf War in 1990.
Western countries such as the U.S., the U.K., Germany and France blamed Iran for the attacks on Saudi infrastructure. However, Iran denied the claims and said Houthis in Yemen, which took responsibility for the attacks, have a right to defend themselves against Saudi presence in the country.
"First, if Iran stops its support of the Houthi militia, the political solution will be much easier," bin Salman said.
"... the Houthis a few days ago announced a ceasefire, from their side, we consider it a positive step to push for more serious and active political dialogue," he added.
Bin Salman warned that a major conflict with Iran could cause prices to see high levels, because of the significance of the Middle East in world economy, transportation and global oil market.
"The region represents about 30% of the world's energy supplies, about 20% of global trade passages, about 4% of the world GDP," the crown prince said.
"Imagine all of these three things stop. This means a total collapse of the global economy, and not just Saudi Arabia or the Middle East countries," he added.
After the U.S. sanctions on Iran that became effective in November 2018, Tehran threatened to block the Strait of Hormuz -- the world's largest chokepoint for oil transit.
The Strait, which connects the Persian Gulf with the Gulf of Oman and located between Oman and Iran saw a daily average oil flow of 21 million barrels per day (bpd) in 2018, according to the U.S.' Energy Information Administration (EIA).
That amount was also equivalent of approximately 21% of petroleum liquids consumption in the world last year, according to the EIA.
Riyadh has also been preparing for the crown jewel Saudi Aramco's initial public offering (IPO) in Saudi stock market Tadawul before the end of 2019, and later in Tokyo for 2020 or 2021.
Aramco's IPO is part of bin Salman's Vision 2030 initiative to make his country less dependent on oil. He projects to raise $100 billion from 5% sale of Aramco, which would make it the world's most valuable firm by market capitalization.
In the aftermath of the attacks, however, it remains uncertain whether the IPO would go forward this year, since there are security concerns regarding how the kingdom would protect the world's most valuable company.
Saudi Arabia spent $68 billion for defense in 2018, and came third after the U.S. and China. The kingdom came on top in the world when this amount is taken into account with respect to GDP of countries.
Bin Salman said it "challenging to cover" all of his country given the kingdom's vast territory.
"Saudi Arabia is almost the size of a continent, it is bigger than all of Western Europe. We have 360 degrees of threats," he said.
Asked why Riyadh believes Tehran attacked Saudi oil infrastructure, the crown prince said it was "stupidity."
"There is no strategic goal. Only a fool would attack 5% of global supplies. The only strategic goal is to prove that they are stupid and that is what they did," he said.
The drone attack that caused 5.7 mbpd of interruption in Saudi oil production was equal to almost 5.6% of global oil supply that stood at 100.7 mbpd in August 2019, according to the International Energy Agency's Oil Market Report for September.
By Ovunc Kutlu