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U.S. Blames Iran for Attack on Saudi Oil Facilities; Polls Show Israel's Election Too Close to Call; Tropical Storm Humberto Moves away from Bahamas. Aired 3-3:30a ET

Aired September 15, 2019 - 03:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[03:00:00]

NATALIE ALLEN, CNN ANCHOR (voice-over): Saudi Arabia's oil facilities come under attack. The U.S. secretary of state blames Iran but Yemen's Houthi rebels say they are responsible. We will have a live report.

Just days after the anniversary of the 9/11 terror attacks, the U.S. president announces that the son of Osama bin Laden is dead.

And the Israeli general election is a neck and neck race between the two main parties. We look at how a third party could tip the scales.

It is all ahead here on CNN NEWSROOM. We are coming to you live from the CNN Center. Thank you for joining us. I am Natalie Allen.

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ALLEN: Our top story: Saturday's attacks on Saudi oil sites could be a major threat to the global economy. The Saudis say their production is temporarily crippled with oil capacity now cut roughly in half.

Yemen's Iran-backed Houthi militants say they carried out drone strikes but a U.S. source with knowledge of the incident says the attack may have been launched from inside Iraq.

Ultimately U.S. secretary of state Mike Pompeo says Iran is to blame; Iran denies it. On top of the economy, the attacks look to have major diplomatic consequences. CNN's Jeremy Diamond explains that from Washington.

(BEGIN VIDEOTAPE)

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: This all does put a big question mark over the potential diplomacy, the diplomatic engagement between U.S. president Donald Trump and the Iranian president Hassan Rouhani, which was slated for potentially taking place next week at the U.N. General Assembly.

Now there was no firm word on whether that diplomatic engagement was going to take place but certainly this latest development putting a damper on that possibility. The U.S. president meanwhile on Saturday did speak with the Saudi crown prince, Mohammed bin Salman, condemning these attacks on Saudi oil facilities. "The United States strongly condemns today's attack on critical energy

infrastructure. Violent actions against civilian areas and infrastructure vital to the global economy only deepen conflict and mistrust. The United States government is monitoring the situation and remains committed to ensuring global oil markets are stable and well supplied."

That is a reference to the United States very concerned about the potential ramifications on the global oil markets. That is something very much on the president's mind, particularly as he heads towards his 2020 reelection with an eye on gas prices in the United States.

The Department of Energy meanwhile making clear that it is prepared to tap into the United States's strategic reserves of petroleum and that could potentially be used to stabilize global oil markets, should it be necessary -- Jeremy Diamond, CNN, the White House.

(END VIDEOTAPE)

ALLEN: The Saudi stock exchange opens this hour. For more on the attacks and market reactions, CNN's John Defterios is live for us in Abu Dhabi.

Hello to you, John. First, let's begin with the magnitude of this attack and how it could affect the world's oil supply.

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Well, these are strikes right at the core of Saudi Aramco, the largest exporter in the world, Natalie. The processing facility is the largest in the world and the energy field as well, the second largest they have, that is a gigantic field covering some 100 kilometers from north to south.

So the attacks were well documented here and they ratcheted up what they have been doing for the last couple of months. Now for context, on the oil market, the world consumes about 100 million barrels a day. Saudi Arabia normally supplies about 20 percent of that.

Overnight, from the guidance I had from inside the company was that there was production hit of about 5 million barrels; that went up to 5.7 million barrels. We are looking at nearly 6 percent of supplies into the energy market.

This is a market that has been oversupplied but Saudi Arabia has been serving as a swing producer to make sure it is balanced. So to have them lose 5 percent to 6 percent of their production is substantial. I have been covering this market for the last 25 or 30 years. This is the largest single day hit ever within the Middle East.

You can go back to the invasion of Kuwait, the Iran-Iraq War, the invasion of Iraq and even the overthrow of Moammar Gadhafi in Libya. We have never seen 5 million barrels a day knocked out of the market.

It is substantial. The oil market, of course, opens in Asia on Monday, the Saudi stock exchange I am sure will take a hit as it opens here in the first 15 minutes of trade, but focus on the energy market and the signals that others are willing to provide, supplies here to balance the market as the Saudis get their footing in the next 24 hours.

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ALLEN: And John, is this a setback for Aramco's plans for an IPO?

DEFTERIOS: Well, in fact, I interviewed the chief executive officer, Amin Nasser, and the new energy minister, Alex Salmond, just in the last week here in Abu Dhabi at a major energy conference. They wanted to step up the initial public offering and hopefully get a valuation of some $2 trillion.

Perhaps by the end of the year listing here in Riyadh and then another international listing in 2020. No doubt the Houthis who are taking claim for these strikes are literally trying to put a setback into that initial public offering.

Also we have to dial back just five months, Natalie. We saw attacks on the east-west pipeline in Saudi Arabia, right at the heart of the country. The field, big gas processing facility that hit the tankers in the port of Fujairah off the coast of the UAE and south of the Strait of Hormuz.

The message from the Houthis here -- and perhaps others, the secretary of state, Mike Pompeo was saying in Washington -- is that no site is safe anymore and this will make it very difficult for Saudi Aramco to suggest we have everything under control, we are $2 trillion under valuation and security is not a problem.

This changes the game, no doubt, by taking out 5 million-plus barrels a day of production. Aramco is phenomenal at responding to these challenges and let's see what they say in the next 24 to 48 hours. They say, within days, they plan to be back up to 100 percent of production.

ALLEN: Well, John Defterios, you are the person to talk with about that part of the story. We appreciate your expertise. Thank you, John.

For more of the story, I am joined on the line by Gary Grappo. He is the former deputy chief of mission at the U.S. embassy in Saudi Arabia.

Thank you so much for talking with us. First question to you, initial reports say it was a drone attack by the Houthis but the U.S. blames Iran.

Regardless, is this attack a game-changer in the ongoing Yemen-Saudi conflict and is there a risk of the conflict growing wider?

GARY GRAPPO, FORMER DEPUTY CHIEF OF MISSION, U.S. EMBASSY IN SAUDI ARABIA: I would say yes on both counts. I think what we have seen today with these attacks was the escalation from what had been the very regional conflict there in the southwestern part of the Arabian Peninsula to a conflict now which has global repercussions.

Clearly when oil markets open on Monday morning, we are going to see a pretty sharp rise in oil prices, given the impact on Saudi production from these two facilities and that is going to have pretty serious repercussions on the global economy as consumers begin to pay higher prices for their oil.

So a small conflict in a sometimes forgotten corner of the Arabian Peninsula now has global repercussions and there are going to be others as well.

ALLEN: Well, I know that you have visited the larger of the two facilities attacked. So talk of the scale of the attack, the damage done and how serious this is to Saudi Arabia.

GRAPPO: Well, these are two of the largest oil processing facilities in Saudi Arabia. And in fact, Abqaiq, one of the targets of the attack earlier today, is the single largest oil processing facility in Saudi Arabia and in fact maybe one of the largest of not the largest in the entire world. That scale that we are talking about, that is Abqaiq.

The second facility is smaller but nevertheless still accounts for about 1 percent of the world's oil supply. Abqaiq can account for as much as 7 percent of the world's oil supply.

So clearly those who targeted these drones knew what they were going after and they knew the impact it would have, most certainly on Saudi Arabia and its oil production capacity but perhaps even on world oil prices.

ALLEN: Well, let's talk about what might be Saudi Arabia's response to this. A Saudi-led coalition airstrike recently killed some 60 civilians in Yemen. We know that civilians have been caught in the middle.

What is the danger if Saudi Arabia responds with yet another attack in Yemen?

GRAPPO: I don't think there is any question that there will be some sort of reprisal attack by Saudi Arabia in response to these. That is what has happened in the past.

The question is, what is left to target?

In Yemen, we know the devastation that has already taken place over the course of the four-plus years of this war.

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GRAPPO: And it is hard to know, unless the Saudis have more intelligence, what they are going to go after.

We also know that there has been a horrific humanitarian toll in this crisis; over 100,000, according to one estimate, Yemenis have been killed, many of them civilians.

So it really begs the question, what are going to be the Saudi targets in the event they respond to these attacks? ALLEN: And what is or should be the role the United States plays in trying to diminish tensions after something like this?

GRAPPO: Well, these attacks and the impact that they're going to have on global oil prices clearly shows the importance of addressing this conflict immediately. The United States is pretty much taking a hands off approach to this conflict, unfortunately.

The conflict has been embedded to a certain extent by the United States not only during the Trump administration but the Obama administration, by the supply of weapons to Saudi Arabia that have been used in the attacks on Yemen.

So I think there needs to be a coordinated effort; if it were led by the United States that would be probably the best approach to bring this conflict to an end, starting with a cease-fire.

Humanitarian cost, as I said earlier, has been extraordinary. Now we are going to see it in very high economic costs that will be paid by consumers around the world.

ALLEN: Well, we appreciate your insights and expertise. Gary Grappo, thank you so much.

GRAPPO: You're most welcome. It's a pleasure to talk to you.

ALLEN: Thank you.

U.S. president Trump has announced that one of Osama bin Laden's sons has been killed. He says Hamza bin Laden died in a counter-terrorism operation but he did not say when it happened. Reports of his death surfaced weeks ago but this was the first time they have been confirmed. CNN's Ben Wedeman has more about it.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN SR. INTERNATIONAL CORRESPONDENT (voice-over): He was seen as the likely heir to Al Qaeda, an emerging leader with a distinctive name. Hamza bin Laden, son of the late Al Qaeda leader, Osama bin Laden, has been killed in an American counter-terrorism operation somewhere in the Afghanistan-Pakistan area, according to a statement put out by the White House.

American officials declined to say exactly when he was killed. Earlier this year, the U.S. State Department issued a $1 million reward for any information on the junior bin Laden, stating that he had released video and audio messages online, calling on his followers to launch attacks against the United States and its Western allies in revenge for the May 2011 killing of his father by U.S. military forces.

On the same day, the U.S. Bureau of Counterterrorism called for United Nations member states to freeze his assets and enforce a travel ban.

As a response, his home country of Saudi Arabia said it had already revoked his citizenship. In 2015, Al Qaeda promoted Hamza as a top leader in its jihadi movement. He has been featured in Al Qaeda propaganda videos as a child but only posted audio messages in his later years.

The most recent footage of him was released by the CIA in 2017, showing glimpses of his wedding to the daughter of a senior Al Qaeda leader, which had occurred years before.

Those videos were retrieved from Osama bin Laden's computer when it was seized during the Navy SEAL raid that killed him in 2011. Hamza is but one of Osama bin Laden's sons to be labeled by U.S. intelligence as a significant threat and the third to die while trying to follow in his father's footsteps -- Ben Wedeman, CNN, Beirut.

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ALLEN: We are days away from Israel's historic general election and the prime minister is making last-minute moves to sway the vote in his direction.

Will it work?

We take a look.

Plus, two weeks after Hurricane Dorian, the Bahamas has a brush with a second disaster as Tropical Storm Humberto skirts the islands. Derek will tell us about that, coming up.

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ALLEN: Israel's prime minister hopes a mutual defense agreement with the U.S. will give him an advantage at the polls Tuesday.

On Saturday, he discussed the possibility of such an agreement with U.S. president Trump. In a tweet, he thanked Mr. Trump for the discussion, writing this, "The Jewish state has never had a greater friend in the White House."

He adds he looks forward to discussing the pact at the United Nations. Previous attempts at a defense pact were rejected by both countries. CNN's Sam Kiley joins us from Jerusalem with a closer look at the upcoming election, just a few days away.

And Sam, according to the polls, it is anyone's guess who will come out ahead on Tuesday.

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, it is a very difficult one to call indeed, not least because opinion polls in Israel, ahead of elections, particularly at this sort of stage, Natalie, are notoriously inaccurate. They very seldom reflect what actually comes out. But at the moment they are showing Benny Gantz's Blue and White Party neck and neck essentially with the Likud Party of Benjamin Netanyahu.

The latest stunt from Donald Trump, trying to give him a little bit of nudge, will play reasonably well to Netanyahu's base but ultimately here in the final couple of days before the elections, it is all about the very wide range of parties trying to galvanize as many supporters to go to the polls yet again in Israel's general elections.

One of the groups that are going to be key or potentially key to all of this, that are frequently rather forgotten, frankly, Israeli Arab population. This is my report on them.

(BEGIN VIDEOTAPE)

KILEY (voice-over): An election poster calling on citizens of this Arab-Israeli town to vote for the man on the right. It's safe to say they probably won't. Support for Prime Minister Benjamin Netanyahu and his Likud Party is close to nil around here.

UNIDENTIFIED MALE (through translator): We have to vote for the Arab Joint list, even if we feel it won't affect the Knesset. At least we can fight for our rights, rights that no one else will ask for."

KILEY (voice-over): About a fifth of Israel's population is Arab. Among them, voter turnout has been falling but that may change.

(on camera): With the two main parties pretty much neck and neck in these elections, there's a really strong feeling in the Arab community that, this time around, their votes really count, perhaps galvanized by recent remarks by Benjamin Netanyahu.

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER: (Speaking foreign language).

KILEY (voice-over): He's raised tensions by saying that, if he is elected, he will annex the Jordan Valley into Israel.

Facebook has said that it suspended the automated messaging system on the prime minister's official page for 24 hours because it violated its rules on hate speech.

This, after the chatbot shared a pop-up message that encouraged people to vote Likud because a "secular left-wing weak government" would rely on Arabs "who want to destroy us all, women, children and men" and "will enable a nuclear Iran that will eliminate us."

Netanyahu said the message was a mistake, that he hadn't written it or seen it beforehand and that he ordered it removed immediately.

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KILEY (voice-over): Opinion polls show that the mainly Arab Joint List is expected to come third with some 12 Knesset seats.

UNIDENTIFIED MALE (through translator): We will all vote for the Arab List this time more than ever because of the racism against us.

KILEY (voice-over): An alliance with the right-wing Likud has been ruled out. But Likud's main rival, Blue and White, has so far brushed off the offer of a pact with the Joint List because of its anti- Zionism.

The latest polls show, that if it wants power, though, that may have to change.

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KILEY: So, Natalie, there will be inevitably a lot of horse trading led by the center left bloc led by Benny Gantz and Yair Lapid and the Likud, the right bloc led for the time being in the early stages after the elections by Benjamin Netanyahu.

But I think really why people are so interested in the outcome of this election is, if Netanyahu fails to put a coalition together or if there is a clear win to the other side, then the court cases, three court cases that loom over him, will come into sharp focus.

And, of course, he would lose any possibility of legislating immunity for himself if he is not in the driving seat as the premier -- Natalie.

ALLEN: It is one election to watch, Sam Kiley, thank you for that report.

You can see special coverage of the Israel elections right here on CNN, beginning at 10:00 pm Tuesday. As the polls close CNN's Becky Anderson has our coverage live from Jerusalem.

Pro democracy protesters are on the streets of Hong Kong this hour for the 15th straight weekend. An unauthorized march in the city's financial center is now underway. Local media reporting that some shops have closed and police are currently at the scene.

Protesters also gathered outside the British consulate, urging China to commit to the Sino-British joint declaration.

The parents of Otto Warmbier had dinner Saturday night at the White House as guests of President Trump. Fred and Cindy Warmbier have had an uneasy relationship with Mr. Trump. Earlier this year, they were deeply upset when he absolved North Korean dictator Kim Jong-un of any responsibility in their son's death.

Otto Warmbier was a college student when he was imprisoned in North Korea and held captive for 17 months. The Trump administration secured his relief in 2017 but he returned home in a vegetative state before dying days later.

We are keeping an eye on Tropical Storm Humberto. It is now moving away from the Bahamas after dumping rain on the area devastated by Hurricane Dorian just two weeks ago.

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ALLEN: OK, more about the Bahamas now. When Tropical Storm Humberto passed by the Bahamas, it hampered recovery efforts from the hurricane. Now that the storm is clearing, those operations can now resume. CNN's Dianne Gallagher is in Nassau.

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DIANNE GALLAGHER, CNN CORRESPONDENT: As Tropical Storm Humberto continues on its path, the people of the Bahamas are refocusing their attention to the relief efforts on Grand Bahama and Abaco Island, trying to get back to those people who need the assistance.

A little bit of a blip in relief efforts due to the incoming storm. They were not able to do much flying to those islands, they were not able to continue the same kind of relief efforts that have been going on now for the better part of two weeks since Hurricane Dorian completely decimated those areas.

Now look, the people who live here right now say that, while they appreciate all of the aid and the rebuilding efforts right now, their focus is on the missing persons list, which stands at 1,300, and the death toll, which stands at 50.

There has not been very much change in that and they are hoping to get some updated information from the Bahamian government sometime soon. That seems to be the biggest concern here.

And on those islands at this point, they are worried at the time that the tropical storm was coming through was that perhaps the wind, the rain may cause structures that were already damaged to fail even further.

There are people who have gone, come here for shelter and then gone back to Abaco to start rebuilding, who were staying in those areas. Plane, a cargo plane from UPS delivered 50 metric tons of aid to Nassau on Saturday.

They are hoping to get that relief aid, much of it focusing on clean water, to prevent the spread of any kind of disease as these recovery and relief efforts continue on those islands.

But look, here in the Bahamas they understand it is going to be a long road ahead for them and the hope is that they start to narrow down these recovery efforts and that they get a better idea of just the extent of the human toll of Hurricane Dorian in the coming days -- I'm Dianne Gallagher in Nassau, the Bahamas.

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And that is CNN NEWSROOM. I'm Natalie Allen. Thanks for watching. I will be right back with our top stories.

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