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Maritime Security

International Oil Supplies Threatened by Somali Pirates

For many of Europe’s oil-using nations, sourcing crude and petroleum products from Middle Eastern oil producers like Saudi Arabia or Kuwait is becoming increasingly fraught.  Crude tankers travelling through the Gulf of Aden are often subject to Somali hijackings.

The added risk affects the global price of crude, oil products and heating oil, because oil market traders factor in geopolitical developments that have the potential to constrain supply when speculating on future oil prices – driving up the cost for end users like heating dealers and their customers.

According to International Maritime Bureau figures, piracy hit an all-time high in the first six months of 2011, with 266 attacks world-wide, up from 196 a year earlier.  Of the 266 attacks, 60 percent were carried out by Somali pirates.

Oil shipments bound for the US have also come under attack. HeatingOil.com reported in February that the Greek Tanker Irene SL loaded with $200 million in crude supplies and bound for the Gulf of Mexico, was hijacked by pirates off the coast of Oman.  An Italian owned tanker carrying $60 million in crude was hijacked in the same area the previous day.

In April, the Tanker Irene SL was released after 58 days in captivity amid reports that a ransom of more than $13 million had been negotiated.  Piracy has become the lone source of revenue in some areas of Somalia and efforts by EU and other naval forces to tamp down attacks have seen limited success.