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Buyers face perfect storm
February 2011 | Adam Leach
Purchasers will have to pay
higher prices for oil if the hijacking of tankers by pirates increases.
The shipping industry has cautioned that if the number of oil tanker hijackings
continue to grow, it will have a major impact on the global price of oil and
disrupt its supply.
This week Somali pirates hijacked the VLCC Irene SL, an oil tanker carrying two
million barrels of oil en route to the US through the Persian Gulf. The
tanker’s cargo represents around 5 per cent of the daily global seaborne oil
Joe Angelo, managing director
of Intertanko -
Association of Independent Tanker Owners, said
the latest attack marked a “significant shift in the impact of the piracy
crisis in the Indian ocean.”
“If piracy in the Indian Ocean
is left unabated, it will strangle these crucial shipping lanes with the
potential to severely disrupt oil flows to the US and to the rest of the
world,” he said in a statement.
Peter Sand, shipping analyst at
an independent international private shipping
association, believes short
periods of supply disruption from the region can be handled but commodity
prices could rise as a result.
“There are still quite high
global inventories of oil around the world, so the world will not stop,” he
told SM. But added: “The repercussions into the commodity price could be
He said the consequences would intensify if the problem persisted for prolonged
periods of time, due to the reliance of markets on the shipping lane. “With the
Persian Gulf providing around 40 per cent of the world’s crude oil exports
there is no immediate alternative to supply,” he added.
In 2008 SM reported shippers were switching routes to avoid the region
and spending money on private security to protect cargo.