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Threats to Oil Transport

Getting oil from the well to the refinery and from there to the service station requires a complex transportation and storage system. Millions of barrels of oil are transported every day in tankers, pipelines and trucks. This transportation system has always been the Achilles heel of the oil industry but it has become even more so since the emergence of global terrorism.

A French supertanker off the coast of Yemen was attacked. October 6, 2002 Terror organizations like al-Qaeda and its affiliates can disrupt the free flow of crude oil by cutting oil transportation routes. Disruption of oil flows through any of these routes could have a significant impact on global oil prices.

Terror organizations have planned several attacks against oil tankers in the Arabian Gulf and Horn of Africa. According to FBI Director Robert Mueller, "There have been any number of attacks on ships that have been thwarted." In June 2002, a group of al-Qaeda operatives suspected of plotting raids on British and American ships and tankers passing through the Strait of Gibraltar was arrested by the Moroccan government. But not all the attacks were prevented. In October 2002, al-Qaeda carried out an attack when a boat packed with explosives rammed and badly holed a French supertanker off Yemen. Many terror experts have expressed concern that Al-Qaeda might seize a ship and crash it into another vessel or into a refinery or port.

There is no doubt that al-Qaeda is intent on hurting the west economically by interrupting the flow of oil to American, European and Asian markets. Al-Qaeda leaders have vowed numerous times, to cut the "economic lifelines" of the world's industrialized societies. Such attacks would not only disrupt life in the west but also weaken and perhaps topple Gulf oil monarchies heavily dependent on oil revenues for their survival.

"Mark my words, with everything that is going on in this world with regards to terrorism, sooner or later the terrorist is going to try to sink a tanker in the Strait of Hormuz, and when that occurs, and that free flow of oil out of the Persian Gulf ends, you're going to have another great energy crisis."
Senator Bill Nelson (D-Florida) Dec 6, 2001 Tankers and pipelines are very vulnerable targets. Tankers are too slow and cumbersome to maneuver away from attackers; they don't have any protection and they have nowhere to hide. There are approximately 4,000 tankers plying the world's oceans. Each of them can be attacked in the high seas or while passing through narrow straits in hazardous areas like the Persian Gulf and Southeast Asia. Geography forces the tankers carrying much of the world's oil supply to pass through one or more of three narrow straits -- the entrances to the Red Sea (Bab-el-Mandeb) and the Persian Gulf (Strait of Hormuz) and the Straits of Malacca between Indonesia and Malaysia. (A quarter of the world trade passes through the Straits of Malacca, including half of all sea shipments of oil bound for East Asia and two thirds of global liquefied natural gas shipments.) These straits are all controlled by Muslim countries where terrorists are known to operate. They are so narrow that a single burning supertanker and its spreading oil slick could block the route for other tankers, hence rocking the entire global oil market for several weeks at the very least.

Pipelines, through which about 40% of world's oil flows, are no less vulnerable. They run over thousands of miles and across some of the most volatile areas in the world. A simple explosive device could puncture a pipeline deeming it non-operational. Due to their length, they are very difficult to protect. This makes pipelines potential targets for terrorists. In summer 2001, for example, a terror attack on an oil pipeline that feeds Saudi Arabia's Ras Tanura terminal, the biggest oil-loading point in Saudi Arabia, was thwarted.

Pipelines are highly vulnerable. Trans-Alaska pipeline spurts oil following gunshot, October 4, 2001 The new threats to the security of oil supplies are directly affecting oil prices. Maritime insurers, for example, have already begun to sharply raise the premiums charged to cover tankers in risky waters. Premiums insurers charge tankers passing through Yemeni waters tripled since the attack in Yemen. For a typical supertanker carrying about two million barrels of oil, the rate rose to $450,000 a trip from $150,000, adding about 15 cents a barrel to the delivered cost of the oil -- and that is just for the ship; the cargo is insured separately. Terror attacks in other locations will carry premium increases in their wake. The increasing costs of securing pipelines, oil terminals and tankers are all reflected in the price of gasoline.

The risks to our energy supply are frighteningly real and there is a limit to our ability to deal with them. Only by increasing our energy independence would we be able to minimize the need to transport oil across the globe and thus reduce our vulnerability to these types of attacks. 

Source: Institute for the Analysis of Global Security