MANAMA, Bahrain — In the first offensive military action launched by Iraq after the outbreak of fighting early Thursday, Iraqi artillery shelled an oil installation on the coast of northeastern Saudi Arabia, setting crude oil stocks aflame. Allied forces then knocked out the Iraqi guns.

The shelling hit the oil facility at Khafji, about 11 miles south of the Kuwait border, for about two hours Thursday morning as U.S. warplanes streaked overhead to hit targets in Iraqi-occupied Kuwait.

The oil installation, which belongs to the Arabian Oil Co. Ltd., is jointly owned by Japan, Saudi Arabia and Kuwait and handles oil from the so-called neutral zone oil fields that lie offshore on the border of the two countries. Officials said the facility did not produce a significant amount of oil.

There were no casualties reported in the shelling, but there were conflicting accounts about the extent of damage. An oil company official said one small holding tank was set ablaze, while the Saudi government said the shelling ignited a number of tanks.

A Saudi government statement said two tanks were still burning late Thursday. Television pictures from the area showed an immense black cloud of smoke pouring over the northern Persian Gulf.

The Saudi statement said the civilian population of the town, which had been 20,000 before Iraq's invasion of Kuwait Aug. 2 but had dwindled to 1,500 in recent days, was evacuated before the shelling began. It said Saudi military forces that had manned gun emplacements around the town had been ordered to withdraw beyond the range of Iraqi gunners.

The Saudi statement said the Iraqi guns were finally "spontaneously destroyed" by air and ground forces. One report said that U.S. Army Cobra helicopters had gone into action against the Iraqi artillery.

A U.S. military spokesman said only that the Iraqi guns had been "basically neutralized," but it was unclear which unit had gone into action.

The artillery was presumably fired from the extreme south of Kuwait, where a similar pumping facility belonging to the U.S. Getty Oil Co. was seized by the Iraqis after the invasion of the emirate.

U.S. Army units sent a motorized patrol to Khafji after reports that figures were seen on rooftops of Khafji's buildings, but withdrew after the reports proved unfounded.

Nobuo Atsumi, a liaison official for the oil company, said in a telephone interview that none of the personnel working at the installation had been injured by the barrage because everyone had sought refuge in a bomb shelter earlier in the day.