Suspected al Qaeda militants wearing military uniforms killed at least nine Saudis and seven foreigners in the Saudi oil city of Khobar today before holing up with hostages in a housing compound.
Saudi forces stormed the Oasis compound in the eastern city, but the battle was raging on and the militants were still holding hostages, security sources said. A senior Saudi officer was wounded.
Many civilians were evacuated from the area and the compound was cordoned off after the attack, the second in less than a month to target Saudi's vital oil industry and Westerners who form a large part of its workforce.
Saudi Arabia is the world's largest crude exporter and oil markets have been on edge over the possibility of a militant strike that would disrupt supplies.
"We are hearing that a number of hostages, mainly Westerners, are being held inside," said a local resident, who asked not to be identified.
"Ambulances have been going in and out of the compound," said witness Mohammed Sweidan. "We've heard lots of gunfire."
An American, a Briton, an Egyptian, two Filipinos, an Indian and a Pakistani were killed when the militants attacked foreigners' compounds in Khobar, along with two Saudi civilians and seven security force members, the security sources said.
"I can confirm the death of at least one American. There may be more," a US embassy official said.