Oil & gas prices gave back early gains on Monday, amid a cyber-attack that has shut down the U.S.’s largest gasoline pipeline for the past four days. Crude oil, gasoline, natural gas, and other petrol products saw an initial spike as futures markets opened on Monday, but failed to hold onto gains throughout the day.
Colonial Pipeline carries an average of 2.5 million barrels a day of diesel, gasoline, and jet fuel; representing 45% of the East Coast’s supply. Despite early efforts to get back online, the pipeline operator says they are still days away from being back in full operation, giving the weekend an initial key target for resumption.
The FBI has publicly identified “DarkSide” as the criminal network behind the ransomware attack that brought down the pipeline. DarkSide has since issued a statement noting the incident saying “our goal is to make money and not creating problems for society.”
Colonial Pipeline: Looming Fuel Shortage Could Cause Major Disruption, Surge in Prices
As of Monday evening, there are no reports of any major fuel shortages, as the near-term picture remains somewhat stable. However, the cyber-attack is already disrupting oil refineries across the United States. A prolonged shutdown of the Colonial Pipeline could have a severe impact on energy prices.
Gaurav Sharma, an independent oil analyst, has noted that Texas refineries are seeing a lot of fuel stranded as a result of the pipeline shutdown. Sharma added that oil futures traders are now all-hands-on-deck to help meet demand as inventories begin to decline.
“Unless they sort it out by Tuesday, they’re in big trouble,” said Mr. Sharma. “The first areas to be hit would be Atlanta and Tennessee, then the domino effect goes up to New York.”
President Biden has issued an emergency order in response to the attack, which has helped relaxed laws on road transport of oil & gas. The Administration says an investigation is ongoing into all aspects of the cyber-attack.
Cybersecurity Stocks Get Caught In Tech Sell-Off
Cybersecurity stocks saw renewed interest amid news of the attack on the Colonial Pipeline. As was the case with energy prices, cyber firms saw an initial bump only to give back gains as the trading day marched on. Many market analysts attributed the reversal to the overall tech-led Nasdaq sell-off.
Despite the initial response, the attack is just the latest in a string of high-profile cyber intrusions on government and corporate entities. Cybersecurity demand is expected to pick up, as more organizations are pushed to find potential solutions to offsetting chances of intrusion.
Overall, the Colonial Pipeline hack is yet another reminder of how vulnerable our infrastructure and networks are to cyber-attacks. Cybersecurity defenses on a government and corporate level remain very limited, despite the risks. At some point, the U.S. government will need to begin addressing these cyber hacks that are only getting more disruptive. For the next several days, all eyes will be on the pipeline and fuel inventories.