In one of the most brazen terrorist assaults since more than 50 people were killed in a series of suicide bombings in Riyadh, the capital, last year, gunmen fought a running battle with Saudi security forces after killing at least six westerners, including two from Britain.

A hijacked car containing four gunmen eventually exploded, killing three of the militants and seriously injuring the other.

The onslaught in a Red Sea city that had previously been unaffected by militant upheaval sent shockwaves to London and Washington, where officials are increasingly concerned about Saudi Arabia’s vulnerability to an upsurge of violence orchestrated by Al-Qaeda.

The gunmen opened fire at an oil refinery jointly owned by ExxonMobil, the US oil giant, and Sabic, the Saudi company.

When Saudi security forces arrived, the terrorists reportedly hijacked two cars and took off on a six-hour chase out of Yanbu’s industrial districts and into residential areas. Along the way they fired indiscriminately outside a branch of McDonald’s, several banks and a hotel used by westerners.

One report said that a body was being dragged behind one of the cars, its occupants shouting “Jihad, jihad”.

The international school in the city was said to have been bombed, although it was not immediately clear if the same group was responsible. Children at the school had already been evacuated after warnings spread rapidly through the international community.

All roads out of Yanbu were blocked and the gunmen were eventually surrounded by security forces. One of the cars exploded, although it was not clear whether a suicide bomb was responsible or whether grenades inside the vehicle had been detonated by police fire.

Three terrorists were reported to have died at the scene but an injured gunman was captured and was being treated in hospital last night.

The initial attack killed two American engineers who worked for ABB, the Swiss oil services group, a company spokesman said. He said the victims also included a British employee and a second Briton who was working as a subcontractor.

Two Australians and a Saudi were killed as well and a 41- year-old Canadian was feared to have been paralysed after being shot in the neck. Eighteen people were wounded in all.

The Foreign Office last night named the two dead Britons as Mike Hardy and Mike McGillen but could give no other details.

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