Traders provisionally booked at least six tankers to ship petrol from Europe to US destinations following Friday’s cyber-attack on the Colonial Pipeline, which runs from Texas up to the north-east US coast.
Colonial Pipeline was forced to shut down its entire system on May 7th, leading to fears of gasoline shortages on the US East Coast.
Although some smaller lines were restarted on Sunday, Colonial has given no timeline for the restart of its main pipelines.
Oil analytics firm Vortexa said in a note that if the network remained down for more than a few days, “the nation’s East Coast and Southeastern markets will start to see supply hiccups and related price spikes, while Gulf Coast refining centres will scramble to place cargoes alternatively”.
Vortexa said one question was whether a sustained closure would lead to a temporary waiver of Jones Act rules. It said that, should this occur, there would be a significant impact on trade dynamics, providing a much bigger availability of tankers to transport fuels between US ports.
The Jones Act requires goods moved between US ports to be carried by ships built domestically and staffed by US crews.
The pipeline transports more than 100m gallons of gasoline and other fuel daily from Houston to New York harbour.
A note from Jefferies said that “we expect MR tanker rates, especially from Europe to the US (TC2), to increase substantially. Brokers Lorentzen & Stemoco observed in a note to clients that “the closure to the Colonial Pipeline mainlines may open for more imports of refined products to the USEC, primarily for gasoline on improved arbitrage differentials. That will set in motion westbound trade for gasoline from the European Continent, accelerating the front-haul trade, only weeks before the US driving season officially kicks in on Memorial Day on May 31st”.
A Russian criminal organisation named DarkSide was believed to be behind the ransomware.
Colonial transports about 45% of all fuel consumed on the east coast via a two-line pipeline system that spans more than 8,850 km. One line delivers gasoline; the other focuses on diesel and jet fuel.