At least 12 people died Monday when attackers stormed the US consulate in the Saudi Arabian city of Jeddah. US authorities reported that five consulate employees were killed in the attack. The Saudi Interior Ministry said that four national guardsmen died, either in the attack or in the retaking of the consulate. Three of the attackers were also reportedly killed and two were wounded and captured.

Witnesses said that the attackers managed to breach the heavily fortified compound by overwhelming guards at two gates. According to one account, they used a car bomb and hand grenades to gain entry. Once inside, they hauled down the US flag and burned it. At least 18 people inside the consulate were taken hostage in the incident.

In the shootout that followed, the attackers and Saudi security forces exchanged heavy gunfire. Part of the building was reported to have caught fire. Witnesses reported large plumes of smoke rising from the consulate compound.

Saudi officials initially provided no identification of the attackers, referring to them as “members of the deviant group.” The monarchy has blamed previous similar attacks on Al Qaeda.

US officials said that the consulate employees killed in the attack were not US citizens.

Washington ordered its embassy in Riyadh and its consulate in Dhahran closed down, as intelligence officials warned that other attacks could be imminent. The crisis immediately found expression on world oil markets, where the price of crude rose sharply.

The assault was the most serious incident in Saudi Arabia since Islamic militants killed 22 foreign workers in an attack on a residential complex in the eastern town of Khobar last May. It underscored the deepening crisis of the Saudi monarchy and the mounting anger against the US that has been fueled by the military campaign aimed at crushing resistance to the occupation of Iraq.

President George W. Bush drew attention to the connection between the attack and the struggle in Iraq. “The terrorists are still on the move,” he declared. “They want us to leave Saudi Arabia, they want us to leave Iraq, they want us to grow timid and weary in the face of their willingness to kill randomly, kill innocent people. That’s why these elections in Iraq are very important.”

The Bush administration has announced the deployment of another 12,000 US troops in Iraq in advance of an election it has set for January 30, and the US occupation has carried out a ruthless suppression of political forces opposed to the sham vote.

The pitched battle in the Red Sea port city once again raised questions about links between Islamic militant organizations responsible for the wave of violence against the US and the monarchy and elements within the Saudi security forces and its ruling elite.

It was initially unclear how a small group of unarmed men was able to gain entry to the consulate. The Jeddah complex was described by some familiar with its security as “impregnable,” ringed by concrete barricades and protected by an armored car as well as troops armed with machineguns. It should have been difficult for the attackers to even get near the compound, as the area surrounding it is heavily patrolled.

“The magnitude of this assault on the consulate has taken all Jeddah residents by surprise,” Khaled al-Maeena, the editor of the Jeddah-based Arab News, told Reuters.

“It shows that despite Saudi claims to the contrary, Al Qaeda can still mount operations in the country,” said Simon Henderson, a British consultant on Saudi Arabia. “Worryingly there remain concerns not only about the effectiveness of Saudi security forces but also about their loyalty.”

In earlier attacks there was ample evidence that the militants enjoyed support from within the Saudi state apparatus. In several cases, those involved have managed to escape from police raids. It was discovered that weapons used in attacks had been procured from Saudi national guard stockpiles. In some cases, the attackers were equipped with military vehicles and uniforms.

Osama bin Laden, the Saudi-born leader of the Al Qaeda network, which has been blamed for the string of attacks that have claimed some 170 lives in Saudi Arabia since November of last year, is himself a product of the country’s fabulously wealthy ruling class. There is strong evidence that he continues to enjoy backing from elements within this layer of society, as well as from Saudi Arabia’s powerful clerical hierarchy, which has on occasion issued edicts urging Muslims to protect Islamic militants from security forces.

Washington has chosen to publicly ignore such connections, routinely praising the monarchy for waging a determined battle against terrorism. It fears further destabilizing the regime that sits astride the main source of foreign oil exports. However, such ties raise embarrassing questions about US imperialism’s long-standing connections to Islamic fundamentalism, in general, and bin Laden, in particular, especially during the CIA-backed war against Soviet forces in Afghanistan in the 1980s.