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Oil Prices Edge Higher after Cyber attacks Forces Shutdown of U.S Critical Fuel Pipeline

Crude oil prices edged higher on Monday after a major cyberattack forced the shutdown of critical fuel supply pipelines in the United States and highlighted the fragility of its oil infrastructure.

Brent crude was up by 38 cents, or 0.6%, at $68.66 a barrel by 0443 GMT, having risen by l.5% last week.

U.S. West Texas Intermediate futures rose by 34 cents, or 0.5%, at $65.24 a barrel, after gaining more than 2% last week.

oil chart
Brent Performance Chart

U.S. gasoline prices jumped nearly 2% on Monday, while heating oil was up by more than 1%

The White House said it is working closely with Colonial Pipeline (COLPI.UL) to help it recover from the ransomware attack, which forced the biggest U.S. fuel pipeline operator to shut a network supplying populous eastern states signalling the seriousness of the situation.

Colonial’s network is the source of nearly half of the U.S. East Coast’s fuel supply, transporting 2.5 million barrels per day of gasoline and other fuels. The company had to shut all its pipelines after the cyber attack on Friday, which involved ransomware.

“The major takeaway is the bad guys are very adept at finding new ways to penetrate infrastructure. Infrastructure has not developed defences that can offset all the different ways that malware can infect one’s system.” Andrew Lipow, president of Lipow Oil Associates

It was not clear who carried out the attack, but sources said the hackers were likely a professional cybercriminal group.

On Sunday, Colonial said its main fuel lines remain offline, but some smaller lines between terminals and delivery points are now operational. It didn’t say when the network might return to full operational capacity.

The big unknown is how long the shutdown will last, but clearly the longer it goes on, the more bullish it will be for refined product prices,” ING Economics¬†

The attack has prompted calls from American lawmakers to strengthen protections for critical U.S. energy infrastructure from hacking attacks.

The Department of Energy said it was monitoring potential impacts to the nation’s energy supply, while the U.S. Cybersecurity and Infrastructure Security Agency and the Transportation Security Administration also said they were working on the situation.

Read also: Oil Rises 1% as Investors Watch for China, U.S. Economic Data.