Saudi races to restore supply after oil plants hit by drone strike blamed on Iran

Saudi Arabia raced on Sunday to restart operations at oil plants hit by drone attacks which slashed its production by half, as Iran dismissed US claims it was behind the assault.

The Tehran-backed Huthi rebels in neighbouring Yemen, where a Saudi-led coalition is bogged down in a five-year war, have claimed Saturday's strikes on two plants owned by state giant Aramco.

The kingdom is focusing on restoring production at the plants, as the Saudi bourse slumped three per cent as the week's trading began on Sunday morning.

Saturday's explosions set off fires that engulfed the Abqaiq plant, the world's largest oil processing facility, and nearby Khurais, which hosts a massive oil field.

Saudi's energy infrastructure has been hit by the Huthis many times before, but this strike was of a different order, abruptly halting 5.7 million barrels per day (bpd) or about six percent of the world's oil supply.

"The genie is out of the bottle," said Bill Farren-Price, director of the London-based RS Energy Group.

"It is now clear that Saudi and other Gulf oil facilities are vulnerable to this kind of attack, which means that the geopolitical risk premium for oil needs to rise."

The full extent of the damage was not clear, nor the type of weapons used, and reporters were kept away from the plants amid beefed-up security.

Saudi interior ministry spokesman Mansour al-Turki told there were no casualties in the attacks. 

Aramco has said it will dip into its reserves to offset the disruption, but the incident could affect investor confidence as its stock market debut looms.