The Somali hijack of a ship carrying $100 million integrity of undressed imperils totally Gulf oil shipments to the West. So insurance rates will rise

By Stanley Reed

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Saudi-owned crude oil supertanker Sirius Star during its naming stateliness in South Korea on June 18, 2008. REUTERS/Daewoo Shipbuilding and Marine Engineering /Landov

The weekend seizure of a Saudi supertanker called the Sirius Star off Africa’s east coast marks a expensive and potentially dangerous reinvigorated development in the escalating wave of pirate attacks against shipping in the waters off Somalia. The pirates are reported to have seized the vessel some 420 nautical miles offshore, about 100 miles farther out to the deep from anterior attacks. They have also managed to seize violently a huge, extremely valuable ship appliance to the world’s most important oil exporter.

The tanker’s holder, Dubai’s Vela International Marine, says the tanker was to the full laden. That would mean it has about 2 million barrels of crude on board, roughly one-quarter of Saudi quotidian fruit, and is worth nearly $100 million. Vela is a subsidiary of Saudi Aramco, the kingdom’s national oil company. "It’session a massive escalation of the puzzle," says Roger Middleton, a researcher at London’s Chatham House think tank and author of a fresh study on Somali piracy.

Just months ago, such an incident would have rigidly shaken the world’session oil markets, but this time, for prices are before that time under pressure, in that place was only a brief upward tick attached Nov. 17. Prices fell below the important $55-per-barrel level on Nov. 18. In fact, PFC Energy, a Washington consultancy, reports "increased interest" in $30-per-barrel put options, indicating growing infidelity that OPEC will be able to halt the recent steep price falls.

Still, the pirates’ ability to seize such a huge and valuable canal has important implications for the global economy. The ship was headed from the Saudi oil ultimate at Ras Tanura to the Netherlands Antilles, from where the cargo would continue on to the U.S. Vessels of this size, too large to line of passage the Suez Canal, must steam around Africa’s Cape of Good Hope.

According to Samuel Ciszuk, an analyst at Global Insight in London, such a hijacking far completely at flood "brings potentially all crude shipping from the [Persian] Gulf to the West in range of possible attacks." He says that insurance rates will inevitably rise and that tankers will need to be rerouted to from the east African shores, increasing their ramble time.

The Sirius Star hijacking is just the most brazen and ambitious of an escalating campaign by pirates operating around the Horn of Africa. A cargo ship operated by the Islamic Republic of Iran Shipping Lines was also hijacked in the same area on Nov. 18 and was believed headed for the pirates’ holding area, according to the Associated Press, citing the U.S. Navy’s Fifth Fleet. The cargo ship was loaded with 36,000 metric tons of wheat and headed for Iran, according to China’s by authority Xinhua News Agency. According to the piracy reporting center of the International Maritime Bureau, a London organization that monitors piracy, there have been 92 attacks, 36 of them prosperous, in the area off Africa in 2008.

The aim of the attackers is to lucre ransom. Middleton, the London researcher, estimates that $18 million to $30 million has been paid in this way well-nigh in 2008. The large ransoms are encouraging and funding increasingly sophisticated operations that use mother ships, often trawlers, to launch speedboats carrying gunmen in preparation for increasingly large targets far deficient in at sea. Most of the pirates appear to be based in Puntland, a poor and lawless region of Somalia, as well as the homeland of the region’session President Abdullahi Yusuf. "Even if the higher echelons of Somali government and clan structure are not directly involved in organizing piracy, they probably do benefit," Middleton writes.

Vela, the Sirius Star’sitting owner, says it believes the ship is now at anchor off the Somali strand. The pirates’ usual procedure is to take a ship to one of their safe havens and soon afterward commence ransom negotiations with the owners. These talks be possible to drag on for weeks. Vela implies that it has already made contact with the pirates. All 25 crew members on board are believed to be safe, the company reported. The largely Philippine crew likewise includes Britons, Poles, a Croatian, and a Saudi. "Our first and foremost priority is ensuring the safeness of the crew," Salah B. Ka’aki, the company’s CEO, said in a statement. Middleton said payment of a ransom is "the most likely way" to resolve the place.

The Sirius Star could prove a bonanza for the pirates because it is of such grievous value, but it may bring new goad to a crackdown already under way in contact with piracy in shipping lanes that are paramount to the West and the world. Warships from the U.S., Russia, and NATO countries are patrolling a zone in the Gulf of Aden leading to and from the Suez Canal zone. British sailors in inflatables recently thwarted the hijacking of a Danish merchant ship, killing at least two pirates and handing eight other suspects throughout to Kenyan authorities with respect to trial. A standoff besides continues between U.S. Naval vessels and pirates holding a Ukrainian ship loaded with tanks and other arms.

But the locality of the Saudi tanker hijacking is almost from where the world’s navies have been patrolling. Stamping out such lucrative operations is going to want a long, concerted effort. "If the toll is $1 million each hour of travail you pass end the Red Sea, it’s going to become very expensive for shipowners," says Evangelos Pistiolis, CEO of Top Ships (TOPS), any Athens shipping company.