Crude oil and fuel prices jumped on Monday, after one of America’s biggest pipeline systems was shut down following an alleged cyberattack.
Both US West Texas Intermediate and Brent futures rose by more than 7% come Monday morning, while gasoline futures and heating oil increased by approximately 1%. The sudden surge in prices follows an announcement by Colonial Pipeline, the operator of a major gas pipeline responsible for carrying over 45% of fuel consumed by the US East Coast, revealing it had been the casualty of a cyberattack.
The company was forced to cutoff operations of its main lines, leaving only smaller lines between delivery points and terminals functioning. Colonial is still attempting to get its system fully back online, and refrained from providing a timeline of when it will be able to do that. The situation prompted the Federal Motor Carrier Safety Administration to issue a localized state of emergency spanning across 17 states including the District of Columbia. The order loosens restrictions for drivers hauling refined petroleum products including gasoline, diesel, and jet fuel.
According to analysts at Bloomberg, fuel prices could spike to even $3 per gallon— the highest since 2014— if the disruption continues to persist. “If it [disruption] lasts longer, it’s likely to result in some location dislocations – shortage of oil products in the East Coast, abundance in the Gulf region. That will support New York product prices and might attract more oil products from abroad,” said UBS Group AG commodity analyst Giovanni Staunovo.
Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.