Oil gains after cyberattack forces shutdown of US fuel pipelines

Topics Oil Prices | Cyberattacks

Photo: Bloomberg

Oil rose on Monday after major US fuel pipeline operator Colonial Pipeline had to shut fuel pipelines due to a cyberattack, raising concerns about supply disruption and pump price increases.

Colonial Pipeline said on Sunday its main fuel lines remained offline after the attack that shut the system on Friday, but some smaller lines between terminals and delivery points were now operational.

"The Colonial Pipeline hack headlines over the weekend have lifted oil prices," said Jeffrey Halley, analyst at brokerage OANDA. "Colonial aside, oil may be vulnerable to some abrupt long-covering sell-offs as the week progresses."

Brent crude was up by 35 cents, or 0.5 per cent, at $68.63 a barrel by 1000 GMT. US West Texas Intermediate (WTI) crude rose by 24 cents, or 0.4 per cent, to $65.14. Both benchmarks rose more than 1 per cent last week, their second consecutive weekly gain.

 

"If the pipelines were to remain out of action for any length of time, this would have far-reaching effects on the oil market not only in the US, but also in Europe," said Commerzbank analyst Carsten Fritsch.

"That said, it is currently assumed that the disruption to the pipelines will be resolved in a matter of days, so the impact should be limited."

The White House was working closely with Colonial to help it to recover. Commerce Secretary Gina Raimondo said the pipeline fix was a top priority for the Biden administration and Washington was working to avoid more severe supply disruptions.

Brent crude has risen 33 per cent this year due to supply cuts by the Organization of the Petroleum Exporting Countries and allies, known as OPEC+, and easing coronavirus movement restrictions in the US and Europe.

While some analysts have said oil demand may never reach pre-pandemic levels, Goldman Sachs said it expected this by the end of the year and predicted Brent would hit $80 and WTI $77 within six months.


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


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