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

[coyoteincorrales]

Of course pirates will raise the cost of oil since the real pirates are the oil companies.

[thegreatgiginthesky]

I'd like to know how a handfull of guys on a speed boat were able to stop a tanker? I mean those tankers are huge ships. Does the crew not have anything to defend themselves? How did the pirates board the vessle?

[hart444]

When the ship is full of crude, it sits very low in the water. And putting armed guards on an ship full of combustable liquid is a bad idea.

[thegreatgiginthesky]

Rubber bullets?

[jhb90277]

There have been instances of ships defending themselves with high pressure water blasts to repel boarders. There was another ship that used an ear-splitting sonic beam directed at pirates to repel them. So at least there are some non-lethal alternatives out there that shouldn't put burdensome requirements on mariners in order to use them.

[realityczech4u]

Brilliant. "Non-lethal alternatives" send them on their way only to return another day, ever more determined to succeed.

[leamio]

For some reason, them being pirates makes me less anxious about the whole situation.

I mean, come on! If we've learned one thing from Johnny Depp, it is that pirates are cool.

[Sarahjan]

if it does , it means these guys are connected with oil companies !

[Pupadup4oBama]

Ok, this is scary - I SWEAR this is just like the new James Bond movie that I just saw today!

[peterfromcanada]

or do the same if they are attacked.....

[DuganS1]

Oil is in a bear market and will remain so until it appears there is a world economic recovery on the horizon. Certain events may cause the price of oil to spike briefly, but any rally will be sold off in a bear market. I think hedge funds will start coming back to the oil market at the beginning of next year, not necessarily in January, but at some point. ONly then will events like pirates, Nigerian rebels, Iranian sabre rattling, etc cause the temporary spikes to hold.

[peterfromcanada]

What terrifies me is that they will ransom the ship and sink it if they don't get the cash.

[marijam]

America needs to go in and wipe them out, like we did the Barbary pirates.

[tomas0808]

If we could get free education and healthcare I would pay 15$ a gallon

[AnnArky]

There's an organization of pirates known as OPEC who have been, for decades, holding oil for ransom to the highest bidder. The American driver loves and supports pirates . . . . Aarrggghhh.

[Grannysue]

You know what they say, no honor amongst thieves! LOL

[harriettubman]

Pirates off the Somalian coast have been hijacking ships for quite a while so OPEC needs no excuse saying they didn't know. I wonder why a tanker would have no guns loaded on deck to protect themsevles in that area? Hmmmm. Sounds fishy to me.

[frictionlessmatter3]

I wouldn't doubt that OPEC contracted the pirates to capture this ship.

[Politiking]

Freaking OPEC is looking at any excuse to raise crude prices. $5 million ransom for your ferry should not translate to $50/barrel increase! Get than looserSpeculators!

[harriettubman]

I agree.