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

[pointyheadprodigy]

Do they ship the oil from Canada to us on seagoing tankers?

[sean6886]

Is that the new excuse?

[hellifiknow]

Long live the Somali pirates! They have no government and they aren't out to hurt people...but it's the only way they can survive. The NY Times has been covering this for months and as far as they've reported, it is an independent group. Think about it...what would you do if you were a starving fisherman and you haven't had a government in 20 years? I'm sure you'd figure out some way to survive so if folks are still sailing in your unpatrolled waters...cause you don't have a Coast Guard...then I guess you'd do what you have to do. Lawlessness is put into perspective when you need to eat.

[Bystander]

Great example of moral relativism! So if someone in your town is "starving," it's OK to kill and rob you? These pirates should be brought to justice, not brought to a grocery store.

[realityczech4u]

I strongly disagree. All ships need to carry a heavily armed security force and either infrared or radar detection devices. Then as they attempt to board the ship, they should be gunned down like dogs.

[peterg76]

Have you considered that raising the price of crude may be what the pirates were hired to do?

[pointyheadprodigy]

As sweet as retiring from the military and working civil service.

[wm1066]

I wouldn't put it past the Saudi's to be in on this so they can raise the price of oil.
These pirates know if they did piss of the Saudi's they would be in deep crap so there has to be some kinda deal going on.

[indyleftist]

Its interesting how these stories are being covered.
They seem to be pretending that these are independent pirates as opposed to an organized political group that has formally declared war.

It seems to be spreading. MEND (Movement for Emancipation of the Niger Delta) may end up becoming a real political force

[spyguy68]

Since there is no Somali government and the pirates build big houses from their profits, it would be easy to just bomb the heck out of all the big homes in Somalia to send a clear message that pirates and their families die if the attacks on the ships don't stop.

As for the shippers and their insurance providers, I would think it would be much cheaper than ransom for each ship to have a few dozen ex-marines equipped with shoulder launched missiles, automatic weapons and helios equipped with rockets that could easily take out the pirates and their mother ship.

The world could put a stop to most of this if the big countries just used the force they have.

[realityczech4u]

Agreed. This could be stopped forthwith if there were the will to do so. A read of the recent Times Online article reveals that the affected nations are all tangled up in "rules of engagement" and other PC nonsense. There is but one "rule of engagement" that has any teeth: "Destroy the enemy." Period. By whatever means it takes.

[TrooAmerican]

"Will Pirates Raise The Price Of Oil?"

...isnt that what they've been doing for 8 yrs?

[Vyvjala]

Your correct there...........

[Stretchumall]

Well (no pun intended) lowering output didn't work for OPEC so i guess this is better than nothing.

Give us money or we'll pollute the ocean!

We want $700 billion or we'll destroy your economy!
Whats the difference?


Stretchumall

[Bobleblah1]

Will Cobra commander tell Destro to hijack all oil ships????????????????????????

We wait with baited breath..................................................

What, is this web site for 5 year- olds?

[MCSqueak]

If they simply used ninjas to defend the ships, things like this wouldn't happen. Ninjas and pirates are natural enemies.

As an added benefit, using ninjas rather than armed guards would ensure that the tanker couldn't accidentally be blown up.

[sparkey]

Heck, the pirate ship was probably paid for by Chevron and filled with fuel by BP.

[darthdarcy]

The general rule with piracy was to attack the ports from whence they came, totally destroy them...

Why are we waiting, they've taken like 8 ships this week..alone..

[pat8942]

Why not blockade the ports these thieves use to stash the ships until they get their ransom.
They could still hijack the ship but they would have nowhere to go with it.
Every ship,boat or inner tube passing out of these ports should be subject to search and if they can't come up with a legitimate destination then they get turned back to where they came from.

[Erdgeist]

imagine a hedge fund secretly funding pirates to rob oil tankers to drive up the price of oil. Wow! What a neat idea. I've got to get on the phone and talk to my hedge fund manager.

[darthdarcy]

The Somali's don't know they just stole from, The Mafia..!

We what I mean..?

There will be some serious retributions for this, no doubt about it..!