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

[wndrwrthg]

Launch the "Q boats".

[AnotherHuddy]

Arr.

~s~

[howmuchisenough]

Sink that thing, and make sure all the pirates go down with it.

[thegreatgiginthesky]

Bettter yet nu ke it.

[bhshore]

IRONIC - ONE CROOK ROBBING ANOTHER WAAAAAAAAAAAAAAAAAAAAAAAAAA

[marymansour]

Is there any excuse for piracy these days? Especially off an African coastline in the Indian Ocean. Why doesn't the UN or some group police these waters? It's a bunch of Somalians in a row boat for crying out loud.

[DumbDad]

and if the greatest Navy in the history or forseeable future of human thought is helpless to deal with these crooks, what exactly is it for?

[ProudAmericanLiberal]

They only exist for the purpose of harassing the Iranians.

[KillTheMessenger]

The greatest Navy, by far, if measured by success and reach and willingness to sacrifice was the British Navy. The US Navy has not been able to decidedly win a single conflict since WW II and compared to the sailors on British ships in the 18th and 19th century today's US crews are whiny collections of yellow bellies hiding behind computer controlled guns and laser guided bombs.

Try re-loading a 19th century canon while having shrapnel flying all around you... now that takes real guts!

:-)

[harriettubman]

No excuse. Somalian warlords have decimated their country. Many of their people are either in refugee camps or are refugees in other countries, including the U.S. The country still has no standing government, even after Black Hawk Down. Lame excuse for a nation.

[marymansour]

I know that Kenya, Tanzania and Ethiopia have navies. The oil must be destined for the horn of Africa. Can't these navies band together and protect their oil from the brigands that constitute the 'government' of Somalia? It seems bizarre.

[davidly]

Get on it.

[KillTheMessenger]

Hmm... the thingy contains 2.5% of the world's daily oil consumption. Can the pirates spell "drop in a bucket"?

[realityczech4u]

Maybe. Maybe not. But they can count to 100 million, apparently...........

[KillTheMessenger]

To which oil terminal in the US or Europe or Asia are they going to go to offload and sell the hot merchandise? The ship is insured and the owner won't take much of a loss.

:-)

[SolarPowerGuy]

In fact, the price of gasoline at my neighborhood crossroads has risen $0.14/gallon over the past two days. There are three stations at that intersection, plenty of competition. Duh - is someone trying to exploit the news?

[KillTheMessenger]

Exploit the news? Hardly. The news is not buying gasoline. You, on the other hand...

:-)

[SolarPowerGuy]

Are you familiar with a term from linguistics, "deep structural ambiguity"? I'm not quite sure how to parse your remark. Care to rephrase?

[harriettubman]

I can top that. A store in Southern IL is still selling gas for $3.89. He says he stocked up when it was that price and if he dropped it now he'd lose money. He claims his regular customers still come for gas too. Silly, I'd drive 10 miles before paying that with gas now $1.99 or less.

[MCSqueak]

Haha, how big of a storage tank does he claim to have? :)

That seems suspect to me. I know you can buy gas for future delivery at one price in order to lock it in from going up more, which is what the airlines do, but it would seem silly for a single station to do such a thing.

[g4dualie]

Actually, it's as good an excuse as any to raise prices... the pirates of water world clash with the pirates of oil world and that goes into the cost of doing business. Let the world think the pirates are putting up a good and proper fight and leverage that into higher prices.

If they weren't stealing oil, they'd be stealing each other's purses.

[AmandaBC]

Pirates seizing supertanker from other pirates (big oil.) I don't think it's going to change anything, they're both trying to squeeze people dry...

[Northwest02]

You are absolutely right. No difference. Arrrrrrrr!

[Chavez08]

I don't know about crude but the price of Rum just shot up 40% on the news.

AAARRRRRRRGGGGGHHHHHHH!!!

[truthforme]

Yet another reason to break our oil addiction.

[Mildmannered]

absolutely correct, especially our addiction to imported oil.

[TxAggie]

Addition to foreign oil. Let us hear your solution please.