Oil gains after cyberattack forces closure of US fuel ‘jugular’ pipeline

TOKYO: Crude prices rose on Monday after a major cyberattack forced the shutdown of critical fuel supply pipelines in the United States and highlighted the fragility of its oil infrastructure.
Brent crude was up by 38 cents, or 0.6 percent, at $68.66 a barrel by 0443 GMT, having risen by l.5 percent last week. US West Texas Intermediate futures rose by 34 cents, or 0.5 percent, at $65.24 a barrel, after gaining more than 2 percent last week.
Signaling the seriousness of the situation, the White House was working closely with Colonial Pipeline to help it recover from the ransomware attack, which forced the biggest US fuel pipeline operator to shut a network supplying populous eastern states.
“The major takeaway is the bad guys are very adept at finding new ways to penetrate infrastructure,” Andrew Lipow, president of Lipow Oil Associates told Reuters. “Infrastructure has not developed defenses that can offset all the different ways that malware can infect one’s system.”
Colonial’s network is the source of nearly half of the US East Coast’s fuel supply, transporting 2.5 million barrels per day of gasoline and other fuels, and the company had to shut all its pipelines after the cyberattack on Friday, which involved ransomware.
US gasoline prices jumped nearly 2 percent on Monday, while heating oil was up by more than 1 percent.
It was not clear who carried out the attack, but sources told Reuters the hackers were likely a professional cybercriminal group.
Colonial said on Sunday its main fuel lines remain offline but some smaller lines between terminals and delivery points are now operational. It didn’t say when the network might return to full operational capacity.
A prolonged shutdown of the line, described as the “jugular of infrastructure” in the United States by one analyst, would cause retail prices to spike at gasoline pumps ahead of peak summer driving season, a potential blow to US consumers and the economy.
“The big unknown is how long the shutdown will last, but clearly the longer it goes on, the more bullish it will be for refined product prices,” ING Economics said in a note.
The attack has prompted calls from American lawmakers to strengthen protections for critical US energy infrastructure from hacking attacks.
The Department of Energy said it was monitoring potential impacts to the nation’s energy supply, while the US Cybersecurity and Infrastructure Security Agency and the Transportation Security Administration told Reuters they were working on the situation.