(Corrects to ‘Saudi oil tankers’ instead of ‘four Saudi oil tankers’ paragraph 1)
* Saudi Arabia says drones hit oil pumping stations near capital
* Follows sabotage of Saudi oil tankers off UAE coast
* Oil prices spike on news amid rising U.S.-Iran tension
* Trump denies reported plan for 120,000 troops to counter Iran
* Supreme Leader Khamenei says there will be no war with U.S.
* U.S. suspects Iran proxies behind tanker attacks
* Tehran rejects allegation of Iranian involvement
By Stephen Kalin and Rania El Gamal
RIYADH/DUBAI, May 14 (Reuters) - Saudi Arabia said armed drones struck two oil pumping stations in the kingdom on Tuesday in what it called a “cowardly” act of terrorism two days after Saudi oil tankers were sabotaged off the coast of the United Arab Emirates.
The attacks took place against a backdrop of U.S.-Iranian tension following Washington’s decision this month to try to cut Iran’s oil exports to zero and to beef up its military presence in the Gulf in response to what it said were Iranian threats.
However, U.S. President Donald Trump denied a New York Times report that U.S. officials were discussing a military plan to send up to 120,000 troops to the Middle East to counter any attack or nuclear weapons acceleration by Iran.
“It’s fake news, OK? Now, would I do that? Absolutely. But we have not planned for that. Hopefully we’re not going to have to plan for that. And if we did that, we’d send a hell of a lot more troops than that,” Trump told reporters.
Iran’s Supreme Leader Ayatollah Ali Khamenei said there would not be war with the United States despite mounting tensions over Iranian nuclear capabilities, its missile program and its support for proxies in Yemen, Iraq, Syria and Lebanon.
“There won’t be any war. The Iranian nation has chosen the path of resistance,” he said in comments carried by Iran’s state TV. He repeated that Tehran would not negotiate with Washington over Iran’s 2015 nuclear deal with major powers.
Trump withdrew the United States from the pact a year ago and has increased economic sanctions on the Iranian government. Tehran had agreed to curb its uranium enrichment capacity, a potential pathway to a nuclear bomb, and won sanctions relief in return under the accord signed during the administration of Trump’s predecessor Barack Obama.
The Trump administration’s sanctions are designed to choke off Iran’s oil exports, its main source of revenues, in an effort to force Iran to accept more stringent limits on its nuclear and missile programs.
U.S. national security agencies believe proxies sympathetic to or working for Iran may have sabotaged the tankers off the UAE coast rather than Iranian forces themselves, a U.S. official familiar with the latest U.S. assessments said on Tuesday.
The official said possible perpetrators might include Houthi rebels in Yemen and Iran-backed Shi’ite militias based in Iraq, but Washington had no hard evidence. On Monday, a U.S. official familiar with U.S. intelligence had said Iran was a leading candidate for the tanker sabotage but the United States did not have conclusive proof.
Iran rejects the allegation of Iranian involvement and Iranian Foreign Minister Mohammad Javad Zarif said that “extremist individuals” in the U.S. government were pursuing dangerous policies.
Houthi-run Masirah TV earlier said the group had carried out drone attacks on “vital” Saudi installations in response to “continued aggression and blockade” on Yemen.
A Saudi-led coalition has been battling the Houthis for four years in Yemen to try to restore the internationally recognised government, in a conflict widely seen as a proxy war between Saudi Arabia and Iran.
The Houthis have repeatedly hit Saudi cities with drones and missiles, but two Saudi sources told Reuters this was the first time a facility of the state-run Aramco had been attacked by drones.
Aramco said it had temporarily shut down the East-West pipeline, known as Petroline, to evaluate its condition. The pipeline mainly transports crude from the kingdom’s eastern fields to the port of Yanbu, which lies north of Bab al-Mandeb.
The energy minister of Saudi Arabia, the world’s largest oil exporter, said the latest attacks caused a fire, now contained, and minor damage at one pump station, but did not disrupt oil output or exports of crude and petroleum products.
Oil prices rose on news of the attack on the Saudi pumping stations, more than 200 miles (320 km) west of the capital Riyadh. Brent was trading at $71.37 a barrel by 1715 GMT, up 1.62%.
Sunni-ruled Saudi Arabia and Shi’ite majority Iran are regional rivals and oil from the kingdom was expected to compensate for the decline expected in Iranian exports.
Saudi Energy Minister Khalid al-Falih, in comments run by state media, said the drone attack and Sunday’s sabotage of four vessels, including two Saudi tankers, off Fujairah emirate, a major bunkering hub, threatened global oil supplies.
“These attacks prove again that it is important for us to face terrorist entities, including the Houthi militias in Yemen that are backed by Iran,” Falih said in an English-language statement issued by his ministry.
A fifth of global oil consumption passes through the Strait of Hormuz from Middle East crude producers to major markets in Asia, Europe, North America and beyond.
Iran’s Revolutionary Guards threatened last month to close the narrow waterway, which separates Iran from the Arabian Peninsula, if Iranian vessels were barred from using it. (Reporting by Stephen Kalin and Rania El Gamal; Additional reporting by Alexander Cornwell, Asma Alsharif, Aziz El Yaakoubi and Davide Barbuscia in Dubai; Ahmed Aboulenein in Baghdad; Mark Hosenball, Doina Chiacu and Makini Brice in Washington; Bozorgmehr Sharafedin in London; Writing by Ghaida Ghantous and Arshad Mohammed; Editing by Grant McCool)