Mike Pompeo favors 'peaceful resolution' to crisis after Saudi Attack

US Secretary of State Mike Pompeo Thursday said he preferred a "peaceful resolution" to a crisis sparked by attacks on Saudi oil infrastructure, as Iran warned against "all-out war".

Pompeo has blamed Iran for the weekend assault on two facilities which wiped out half of Saudi oil production, dismissing its denials and condemning the "act of war".

The rhetoric has raised the risk of an unpredictable escalation in the tinderbox region where Saudi Arabia and Iran are locked in a decades-old struggle for dominance.

Visiting the United Arab Emirates, Pompeo however said his country would prefer a "peaceful" solution to the crisis.

"We'd like a peaceful resolution," he said.

"I hope the Islamic Republic of Iran sees it the same way," he told reporters after talks with the leaders of the United Arab Emirates.

Iran's Foreign Minister Mohammad Javad Zarif earlier warned any US or Saudi military strike on Iran could cause "all-out war."

"We don't want war, we don't want to engage in a military confrontation," he told CNN in an interview aired Thursday. "But we won't blink to defend our territory."

Pompeo arrived in Abu Dhabi from the Saudi city of Jeddah, where late Wednesday he met Crown Prince Mohammed bin Salman, the kingdom's de-facto ruler who has said the assault poses a "real test" of global will.

The two sides agreed "the Iranian regime must be held accountable for its continued aggressive, reckless, and threatening behaviour," State Department spokeswoman Morgan Ortagus said.

The "unacceptable and unprecedented attack... not only threatened Saudi Arabian national security, but also endangered the lives of all the American citizens living and working in Saudi Arabia," she added.

Saudi officials Wednesday unveiled what they said were fragments of 25 drones and cruise missiles fired Saturday at the facilities in the country's east, engulfing them in flames.

"The attack was launched from the north and unquestionably sponsored by Iran," defence ministry spokesman Turki al-Maliki said, but did not say whether Saudi officials believed Iran would ultimately be found to be the culprit.

Tehran-linked Huthi rebels in Saudi Arabia's southern neighbour Yemen have claimed responsibility, but both Washington and Riyadh have ruled that out, saying it was beyond their capabilities.

French Foreign Minister Jean-Yves Le Drian also said the Huthi claim "lacks credibility".

The Huthis have hit dozens of targets in Saudi Arabia, and their rapidly advancing arsenal has exposed the vulnerability of the kingdom despite its vast military spending.

Huthi military spokesman Brigadier Yahya Saree said Saturday's assault on the two facilities was launched from three locations inside Yemen, using advanced drones with long-range capabilities.

He also threatened the United Arab Emirates, a key member of the Saudi-led coalition fighting the Huthis, saying it was ready to attack dozens of targets including the skyscraper-filled cities of Dubai and Abu Dhabi.

"If you want peace and security for your facilities, and towers made of glass that cannot withstand one drone, then leave Yemen alone," he said.

US military planners weighing retaliation have reportedly forwarded a list of Iranian targets including the Abadan oil refinery, one of the world's largest, or Khark Island, the country's biggest oil export facility, the New York Times said.

Other potential targets include missile launch sites and other assets of the elite Islamic Revolutionary Guard Corps, and bases in the southwest where unusual activity suggests they had a role in the strikes.

"Any strikes against Iran would almost certainly be carried out by volleys of cruise missiles from Navy vessels. Strike aircraft would be aloft to carry out attacks if Iranian retaliated against the first wave," the newspaper said.

Cinzia Bianco, a Middle East analyst at the European Council on Foreign Relations, said the incident could "trigger an out-of-control chain of escalatory events."

"Inside Saudi Arabia, there is uncertainty over the most appropriate course of action," she told AFP.

"However the dominant thinking there points to the US targeting critical infrastructure in Iran as to minimise or exclude any human cost."

Late Wednesday, CBS News cited an unnamed US official as saying Iran's supreme leader Ayatollah Ali Khamenei approved the attack, on condition it be carried out in a way to deny Iranian involvement.

US officials quoted said the most damning evidence against Iran was unreleased satellite photos showing Iran's Revolutionary Guard Corps making preparations for the attack at its Ahvaz airbase.

But the commander of Iran's Revolutionary Guards, Major General Hossein Salami, said Thursday his country was "so powerful that they are forced to falsely accuse us to be behind any incident".

An international inquiry is under way, with the the United Nations saying Thursday experts had arrived in the kingdom and begun their mission "at the invitation of the Saudi authorities".

Trump, who has already re-imposed sanctions that have crippled Iran's economy, promised on Wednesday to "substantially increase" the measures, winning quick praise from Riyadh.

Zarif, himself under US sanctions since July 31, described the measures as "illegal" and "inhuman" and designed to hurt ordinary citizens.