Somali Pirates Strike Again

About this time last year, the "Pirates of the Caribbean: At World's End" DVD sales were an eye-popping $167,484,208 in the United States. Fast-forward almost twelve months and retail sales in just about every consumer category are plummeting in the face of an American recession. Still, pirates of a different kind managed to lead one rally on Monday that could have lasting implications. In a brazen attack, Somali pirates hijacked a Saudi oil tanker, which pushed crude futures off their morning lows. 

As with many of these incidents, the details remain sketchy. Nevertheless, media outlets are reporting that Somali pirates have seized the Sirius Star, owned by the Dharhan-based Saudi Aramco, which is the largest vessel ever to come under attack off the coast of Africa. The ship is operated by Vela International, which has a sizable fleet of Very Large Crude Carriers (VLCCs) connecting traders in the Middle East, Europe and the US Gulf Coast. The Sirius Star is fully loaded with 2 million barrels of crude oil, more than a quarter of the 7 million barrels that Saudi Arabia provides to world markets each day.

While there are indications that other oil tankers have been hijacked in the region, this attack is particularly noteworthy. First, the pirates managed to take control of a ship that is larger than a nuclear-powered US aircraft carrier (more than 1,000 ft long). By contrast, Somali pirates are generally marauding in small speed boats that rely on maneuverability and heavy weapons to pull off an attack. Lieutenant Nathan Christensen of the US Navy's 5th Fleet called the most recent episode "unprecedented." Along with other navies from Russia, India, NATO, and the EU, Lt Christensen represents an international force that is hoping to reverse the recent increase in piracy near the Horn of Africa.

Second, according to the International Maritime Bureau, the Sirius Star was hijacked some 450 miles southeast from the port of Mombassa. This part of the Indian Ocean is not generally considered a strategic chokepoint for petroleum transport. Pirates usually take advantage of narrow shipping lanes in the Gulf of Aden as supertankers travel towards the Suez Canal. The fact that Somali pirates have broadened their operations to reach waters farther off the Kenyan coast speaks to the rising lawlessness of the region. One response to increased piracy in the Gulf of Aden is to send tankers around the Cape of Good Hope in South Africa; however, the Sirius Star attack jeopardizes the presumed security of the southern route.

At first blush, it seems ridiculous that pirates should successfully attack massive cargo vessels. All ships have some sort of security plan, but they usually involve evasive maneuvers designed to create a large wake. The idea is to generate waves that will disrupt the advances of smaller speed boats. Still, the pirates have AK-47s and grenade launchers, while cargo vessels are unarmed (except for a few Israeli ships). Insurance liabilities mean that shipping companies would have to pay higher costs if they were to arm their crews. As a result, these vessels depend on the patchy protection of international navies in the region.

Various strategic risk analysts have indicated that the Somali pirate attack could lead to significant and sustained increases in oil prices. It takes about an extra week to send a tanker around the southern tip of Africa, and the added time and fuel consumption could prop up crude futures that have fallen sharply. In the past, ships carrying chemical, merchant, or fish cargo have been seized, while oil tankers have suffered only attacks. The Sirius Star hijacking could signal the start of a dangerous new era for petroleum flows from the Middle East.

Pirates are said to be using satellite phones and GPS devices to track their targets and increase the effectiveness of their attacks. No word yet on whether they have added portable DVD players to inspire their exploits.