The oil industry has found itself facing a fresh global price demon on Monday, after pirates seized what could possibly be the largest booty ever taken on the high seas.

The Saudi super-tanker the ‘Sirus Star’ and its multinational crew, which includes two British merchant seamen, were boarded in the early hours of Sunday morning around 450 nautical miles northeast of Mombasa in Kenya, according to the US Fifth Fleet.

Lieutenant Nathan Christiensen, spokesman for the ship’s fleet, said: “this is unprecedented.

“It’s the largest ship we’ve seen pirated.”

Unlike OPEC production quota cuts and the painfully slow dissension of the global economy into recession, which both have had a marked effect over time on oil prices, pirates have the ability to make a near immediate impact, albeit largely insignificant in relative terms to the two previously stated problems.

Danger aside, the reasons are purely financial. Oil traders fear that if attacks continue in a sustained fashion then insurance premiums for shipping companies will rally out of control. Secondly if shipping companies are forced to adjust their routes in order to avoid the skull and cross-bone infested waters then charter rates will shoot up, and subsequently have a knock-on effect on oil prices.

Mike Wittner, head of oil market research at Societe Generale, in London, said: “Clearly, pirates can move the waters a little bit on a knee-jerk reaction.”

Following the hijacking of the Aramco-owned tanker, complete with two million barrels of crude oil worth at least $100 million, a few shipping companies have already begun to re-route their cargos in order to circumnavigate the hostile waters.

Away from the commodity markets, the problem at hand remains the tanker itself which was, as of Sunday night, heading towards Eyl, a notorious pirate haven on the Somali coastline. The ships course has raised alarms of a possible environmental catastrophe if the pirates run aground in waters far too shallow for the vast super-tanker.

“But in the grand scheme of things, this super tanker is not going to change the complexion of global markets by itself. Two million barrels mean a great deal to their owner, but we’re talking about an 87-million-barrel a day global market for oil, every day,” added Mr. Wittner.

Danger and peril is of course nothing new to oil markets. When put into comparison with the oil-thirsty rebels of the Niger Delta, and the ongoing violence affecting pipelines across Iraq, the Somali pirates seem more at home at a fancy-dress party than hundreds of miles to the south in the Indian Ocean.

John Kilduff, Senior Vice President, at the brokerage firm MF Global in New York, said: “It is generating great interest, but whether it is a sufficient threat to oil and energy transportation to significantly move markets.”

(OilVoice)