Pirates And Oil: Will Hijackings Raise The Price Of Crude?

This year has seen oil prices fly upward to record highs, but lately the trend has been much lower prices. But something could be changing that: there seem to have been increasing reports of modern-day piracy lately, including earlier this week when pirates hijacked a fully-loaded oil tanker:

DUBAI, United Arab Emirates -- In a dramatic escalation of high seas crime, Somali pirates hijacked a Saudi supertanker loaded with crude hundreds of miles off the coast of East Africa -- defeating the security web of warships trying to protect vital shipping lanes.

The takeover demonstrates the bandits' heightened ambitions and capabilities: Never before have they seized such a giant ship so far out to sea. Maritime experts warned the broad daylight attack, reported by the U.S. Navy on Monday, was an alarming sign of the difficulty of patrolling a vast stretch of ocean key to oil and other cargo traffic.

The tanker evidently had about $100 million of oil aboard, and the owner is reportedly working to get the hijacked supertanker back from the pirates.

In a time when oil prices have been driven down by investors' fears of lower demand, modern-day pirates may be the thing to send prices back up, reports Bloomberg:

The hijacking of a Saudi Arabian supertanker off the east coast of Africa may spur oil and shipping companies to step up security and use alternative routes, delaying cargoes to Europe and the U.S., analysts said.

...

The attacks may divert shipping away from the Gulf of Aden in favor of longer routes to Europe and North America around South Africa's Cape of Good Hope. The extra weeks of sailing and fuel consumption could drive oil and commodity prices higher, according to Chatham House.

MORE PIRATES OVER THE LAST YEAR:

::Contemporary pirates negotiate $8 million ransom for arms-laden cargo ship
::Modern-day pirates attack French luxury yacht
::Pirates attack Exxon vessel

Comments

[jamesdaddio]

Why don't you arm the ships you can't let terrists just take what they want can anyone explain this to me

[Chaucea]

Ah, I see. I was wondering why not a whole lot was being done to deal with this situation. Now it seems abundantly clear. Very very clever.

[lvdragonlady]

If it increases, this time around, many more people will not be buying it, with no jobs, they will not need too.

[we-r-doomed]

Good excuse as any...

[KillTheMessenger]

Must have been a poor excuse. The price of oil is down. Or maybe your conspiracy theory just doesn't work so well.

:-)

[montex]

Now that the Somali pirates have seized a tanker bound for the US, haven't they become a threat to our national security? And why don't these vessels that carry cargo worth over $100M have any security? How hard is it to set up sensors on the ship to detect approaching speed boats or even a boarding party?

These pirates have really opened our eyes to the lax security on these ships. What if these pirates decide to start blowing holes in the sides of these super tankers and cause billions of environmental damage? Will the US (and the rest of the world) do something about them after the fact? And I don't mean appeasement.

Oh wait. I forgot. Somalia doesn't have any oil. Never mind.

[KillTheMessenger]

$100 million sounds like a lot, but it isn't. You need to get a grip on the order of magnitude of international shipping.

Somalia does not have any oil, but it also does not have a way to unload this thing and process the crude. Bummer.

:-)

[darthdarcy]

That might have been the very purpose of attacking a Saudi Oil Tanker and it is likely there is al-Qaeda involvement in this attack since the pirate Somali's where further out in the shipping lanes than usual by far they may have had help with this from Saudi Arabian al-Qaeda or elsewhere to get this ship..

They have taken 8 ships in the past week or more..

[bby328]

Will JTP raise the cost of plumbing?

Will every comment be deleted??

[Louisfreeze]

NO, but betters who have $50 dollar contracts on OIL is what is driving down prices before the new year SUPER SPIKE that some are going to try to blame on the new president. OIL is going back to 80 to 100 dollars in the next 3-6 months. Supplies will be CUT for real soon and with demand still good OIL will make it's comeback.

***On another note: Heating OIL and NATURAL GAS are on their way back to above normal averages. They are going to get the American people on the back end. Don't be fooled! It's all market manipulation to get the consumer on the back end, get then to spend on the front end and batter them in the new year. CONSUMER BEWARE! Bad forces still at work, WE must remain vigilant!!!

[Madmac]

I see this as an opportunity for The U.S. Government to raise some cash or to have some debt forgiven. If we could use some of our assets to protect ships in that area, then we can sell that as a service to these shipping companies.

[KillTheMessenger]

None of these ships is worth even one day of a carrier fleet's operation costs.

[montex]

Please explain to me why these pirates are not a threat to our national security.

[basta]

I don't get it. This is a huge ship, and we know where it is because it's easy to spot from a satellite.

Surround the ship with destroyers and wait till they give up. These guys aren't killers. Not like the ones in the South China area.

[KillTheMessenger]

Even better, shoot this thing to smithereens. OK... maybe not the tanker, but the next freighter. Let the pirates know that we don't care about getting it or the crew back but that we like shock and awe.

[surfscoter]

In reality, there is not too much the "civilized" world can do about this, except by working with the people on land. Suppose the people of Somali were given money as long as no pirate attacks occurred. If attacks continue, no payments are made. That would certainly encourage the Somalis to put the squash on the pirates.

Sort of like a "protection racket" -- or what could be called "insurance" for safe transit through the waters. Not the ideal solution, but it would probably cost less overall then the ransoms that are being paid out, plus all the hassle and delays going on with the shipping and dangers to the crews.

[plages]

And here we thought that the pirates, cheney and bush would be out of office soon!

[realitycheck7]

All have to do is get together to grant permission to a country to blow the craps out of the next 3 ships that are hijacked, no questions asked. Don't negotiate, just blow the ships to pieces and and announce that that is the policy for hijakings without exception

The pirating would suddenly stop

[montex]

You are a genius, aren't you? Did you stop to think that blowing up an oil taker FULL OF OIL might cause a tiny bit of environmental damage?

[jhb90277]

Forget for a moment that there would be major environmental consequences to blowing up a tanker, or any other kind of merchant vessel. Those are mariners on board. What you're advocating is the murder of not just the pirates (no tears here), but the innocent crew. If an American merchant ship was hijacked, would you advocate blowing up the ship with 20 or so American crew members on board? Yes, there are still American-owned, American-flagged ships with American crews. The ship's crew matters, regardless of what country they are from.

[RobinSeattle]

When you said "pirates," I thought that you were talking about the Iranian leadership, Felipe Calderon in Mexico and the Saudi Royal Family

Silly me.

[marsattacks]

So, where's James Bond when you really need him?