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    US govt responds to Colonial pipe cyberattack


The 8,850-km pipeline is a major supplier of gasoline and other refined petroleum products.

by: Daniel Graeber

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US govt responds to Colonial pipe cyberattack

The US federal government on May 9 created an emergency task force to address a cyberattack that closed the Colonial pipeline, a main artery for refined petroleum products.

System operations on the pipeline shut down May 7 as a result of a ransomware attack by a Russian-language group dubbed DarkSide. As a result, the government formed an emergency inter-agency task force to address the issue during the weekend, the Bloomberg news service reported.

The 8,850-km pipeline carries as much as 2.5mn barrels/day of fuel, supplying about half of the capacity for gasoline, jet fuel and other products to the East Coast market. In response, the US Department of Transportation declared a state of emergency across 17 states and the District of Columbia.

“This declaration addresses the emergency conditions creating a need for immediate transportation of gasoline, diesel, jet fuel, and other refined petroleum products and provides necessary relief,” the May 9 order reads.

That relief extends in part to the amount of time delivery drivers can remain on the road.

In a May 9 statement, the Colonial Pipeline Co said that its main networks remained offline, though some laterals connecting various terminals and delivery points were back in service.

“We are in the process of restoring service to other laterals and will bring our full system back online only when we believe it is safe to do so, and in full compliance with the approval of all federal regulations,” the company said.

Norwegian consultancy Rystad Energy said the closure would add a premium to commodities during the current trading week.

“The malware hit the heart of the US downstream network and prices of refined products are increasing amid the disruption, causing a bullish rollover effect on crude benchmarks, with both WTI and Brent boosted in early trading,” oil market analyst Louise Dickson said May 10.

West Texas Intermediate oil was up 0.94% as of 7:30 a.m. ET to trade at $65.51/b. The price for Brent was up 1% at $68.97/b. Dickson said the cyberattack was "hiding a worrying COVID-19 trend in Asia."

"While some oil demand destruction in India is being registered and priced in, the pandemic is also hitting other southern and southeast Asian countries, where infections are on an alarming upward spiral," she said. "Before the US pipeline hack, the worsening COVID-19 situation in Asia was set to have a bearish effect on prices and dominate the week, but now it is limiting the bullish effect of the US pipeline hack instead."