Crude oil prices surge due to cyberattack on pipeline
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Oil prices surge as cyberattack prompts critical US fuel pipeline closure

10 May 2021 (Last Updated May 10th, 2021 10:36)

Global crude oil prices have soared following the closure of the Colonial Pipeline’s critical fuel supply pipeline system due to a cyberattack involving ransomware.

Brent crude increased by $0.38 or 0.6% to reach $68.66 a barrel while the US West Texas Intermediate futures increased by $0.34 or 0.5% to reach $65.24 a barrel, reported Reuters.

The ransomware attack triggered the closure of Colonial Pipeline’s pipeline network that supplies around 45% of fuel consumed by the East Coast, to contain the threat.

In a press statement, Colonial Pipeline said: “These actions temporarily halted all pipeline operations and affected some of our IT systems, which we are actively in the process of restoring.”

As a result of the Colonial’s pipeline system shutdown, the US Federal Motor Carrier Safety Administration issued a regional emergency declaration in 17 states and the District of Columbia.

The states affected are Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas and Virginia.

Commenting on the attack, Lipow Oil Associates president Andrew Lipow was reported by Reuters as saying: “Infrastructure has not developed defences that can offset all the different ways that malware can infect one’s system.”

Sources were reported by Reuters as saying that the cyberattack on the pipeline system was carried out by a professional cybercriminal group.

Colonial said that its main fuel lines would remain closed. It has restarted some smaller lines between terminals and delivery points.

ING Economics was cited by the news agency as saying: “The big unknown is how long the shutdown will last, but clearly the longer it goes on, the more bullish it will be for refined product prices.”

The cyberattack has led to American lawmakers urging for strengthening of protections from hacking attacks for critical US energy infrastructure.

The US Cybersecurity and Infrastructure Security Agency and the Transportation Security Administration told Reuters that they were working on the incident.

Meanwhile, the US Department of Energy is reportedly monitoring the potential impacts of the cyberattack on the nation’s energy supply.