Oil prices rose on May 10 after major U.S. fuel pipeline operator Colonial Pipeline had to shut fuel pipelines due to a cyberattack, raising concerns about supply disruption and pump price increases.

Colonial Pipeline said on May 9 its main fuel lines remained offline after the attack that shut the system on May 7, but some smaller lines between terminals and delivery points were now operational.

“The Colonial Pipeline hack headlines over the weekend have lifted oil prices,” said Jeffrey Halley, analyst at brokerage OANDA. “Colonial aside, oil may be vulnerable to some abrupt long-covering sell-offs as the week progresses.”

RELATED:

Colonial Pipeline Latest: US Government to Help Operator after Cyberattack

Brent crude was up by 31 cents, or 0.5%, at $68.59/bbl by 0820 GMT. WTI crude in the U.S. rose by 46 cents, or 0.7%, at $65.36. Both benchmarks rose more than 1% last week, their second consecutive weekly gain.

“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.”

The White House was working closely with Colonial to help it to recover. Commerce Secretary Gina Raimondo said the pipeline fix was a top priority for the Biden administration and Washington was working to avoid more severe supply disruptions.

Oil has risen 33% this year due to supply cuts by OPEC and allies, known as OPEC+, and easing coronavirus movement restrictions in the U.S. and Europe.

While some analysts have said oil demand may never reach pre-pandemic levels, Goldman Sachs said it expected this by the end of the year and predicted Brent would hit $80 and WTI $77 within six months.

Comments