Colonial Pipeline, what happened in the US (and oil)
di Chiara Rossi
Oil rising after cyberattack on Colonial Pipeline, one of America’s largest pipeline operators. The company forced to close the entire network
Oil prices are still rising due to the blockage of the main US pipeline caused by the cyber attack that lasts for the third consecutive day.
The ransomware attack on the weekend at the Colonial Pipeline, the key US energy infrastructure, forced the company to close the entire network, but the timing for the reboot is not yet clear.
At mid-session, futures on Wti crude oil rose by 0.54% to 65.25 dollars a barrel, those on Brent by 0.66% to 68.73 dollars. According to experts, fuel prices are likely to rise by 2-3% on Monday, but the impact will be much worse if it lasts much longer.
US Trade Secretary Gina Raimondo reported that the federal government is working to avoid a supply freeze.
For the time being, the experts exclude that the attack and its consequences may result in significant increases in fuel prices to the pump. Last weekend’s attack is however the worst ever launched against a critical US infrastructure, and brings the vulnerability of the latter to the center of political debate in the US.
The interruption comes as the fast pace of anti-Covid vaccination campaigns continues to improve the prospects of fuel demand in view of the peak expected for the summer season.
A cyber attack led to the closure of the main US pipeline, the Colonial Pipeline. It was announced by the same company, stating that it had only learned of the attack on 7 May.
Infecting the systems that run the pipeline was ransomware. That is, a type of malware that restricts access to infected devices and requires a ransom to pay for the system to return to normal operation.
THE MAIN OIL PIPELINE IN THE UNITED STATES
The Colonial pipeline is one of the largest pipelines in the United States, which carries refined gasoline and jet fuel along the East Coast from Texas to New York.
The infrastructure transports more than 378 million litres of petrol and other fuels per day to the east coast, equivalent to about 45% of the fuel consumed in the area.
THE RESPONSE OF COLONIAL PIPELINE COMPANY
In response to the attack, the Colonial Pipeline Company had to “shut down some systems to contain the threat, temporarily suspending all pipeline operations”.
Since then, he’s cut off the 8,850-kilometer pipeline network.
“At this time, our main concern is the safe and effective restoration of our service. This process is already underway and we are working tirelessly to minimize the discomfort of our customers,” the company explained in the statement.
On Sunday evening, the company announced that, although its four main lines remain offline, some smaller side lines between terminals and delivery points are now operational.
RESTARTING THE TASKS
Biden’s administration is also working closely with the company in its efforts to restart operations.
“Right now it’s a direct effort on the bridge… We are working closely with the company and state and local officials to ensure that we get back to normal operations as quickly as possible and there are no interruptions in the offer,” said US Trade Secretary Gina Raimondo.
The attack comes just as the American energy industry is preparing to meet the rising demand for fuel in view of the resumption of air travel.
BIDEN DECLARES A STATE OF EMERGENCY
American President Joe Biden has declared a state of emergency, to ensure that measures such as road fuel transport and the extension of daily working hours to American road hauliers are activated, to enable faster delivery of supplies.
THE PRICE OF OIL
Meanwhile, the price of crude oil is rising. Oil prices have been rising for almost two months.
WHAT ANALYSTS SAY
According to the Wall Street Journal, fuel markets are not expected to suffer significant repercussions unless the pipeline is closed for several days.
It is likely that crude oil prices will rise at several points of fuel distribution – including Wilmington in North Carolina, Charleston in South Carolina and Savannah in Georgia – told Bloomberg Ernie Barsamian, CEO of Tank Tiger.
Independent oil market analyst Gaurav Sharma told the BBC that there is now a lot of fuel in Texas refineries. “Unless they solve by Tuesday, I’m in big trouble,” Sharma said. “The first areas to be hit would be Atlanta and Tennessee, then the domino effect arrives in New York”.
I prezzi del greggio sono supportati “dall’attacco informatico compiuto contro la società Colonial Pipeline”, oltre che dalle prospettive di miglioramento della domanda globale, ha affermato Ipek Ozkardeskaya, analista di Swissquote Bank.
DARKSIDE BEHIND THE CYBER ATTACK ON COLONIAL PIPELINE
Responsible for the cyber attack on Colonial Pipeline would be the criminal organization known as Darkside. The latter claims to steal funds from large companies and corporations to distribute them to charities. US investigative sources report it.
THE COMMENT BY FEDERPETROLI ITALIA
“At least as far as I can remember, this is the first time I have witnessed a cyber attack on an oil infrastructure as one of the world’s largest pipelines in size, the Colonial Pipeline network.” in the United States, the president of Federpetroli Italia, Michele Marsiglia, told La Presse. “We’re talking about 9,000 kilometers of pipeline, we could compare it almost to our Tap”.
“In these hours – Marseilles emphasizes – also the flocks will endure of the strong tremors of volatility, mainly the WTI crude of reference USA. There will be strong oil supply operations on the financial markets through spot loads to temporarily meet the needs of the American coast”.
UNDERMINING ENERGY DEPENDENCY
“For some time now in Italy, the company’s security divisions have been investing with continuous research and studies on the new era of cybernetic terrorism, mainly in refineries and offshore platforms,” continued Marseille.”And it is normal for such logistical and detention damage to be declared a state of emergency, especially for a country like the United States. The most surprising thing is that of seeing a country like the US increasingly globalized and at the forefront of internal security techniques and measures, at the same time suffering such attacks although computer-related that they compromise, in a few hours, total energy dependence”.