Tanker rates are surging after U.S. refiners rushed to book vessels to store fuel as the key fuel pipeline in America shut down in the wake of a cyberattack during the weekend.
With the main pipeline carrying gasoline and diesel to the U.S. East Coast down, the largest American refiners are scrambling to book vessels for floating storage of fuel, shipbrokers told Bloomberg.
The refiners on the Gulf Coast look to store the fuel that is going nowhere as the Colonial pipeline would be shut down until at least later this week. Refiners are also booking vessels to ship fuel to destinations such as the Far East, Brazil, and the Caribbean.
As a result, tanker rates are going through the roof.
"There's no longer a market," shipbroker Simpson Spence Young said in a report on Monday carried by Bloomberg.
The current situation is "a smash and grab scenario with charterers focusing on securing tonnage," according to Simpson Spence Young.
The cyberattack during the weekend caused the shutdown of the Colonial pipeline, which carries some 45 percent of the gasoline and diesel fuel the East Coast of the U.S. consumes. The Colonial pipeline is the biggest pipeline infrastructure in the United States, running 5,500 miles from Houston to Linden, New Jersey, carrying some 2.5 million barrels of gasoline and diesel daily.
Related Video: Massive American Pipeline Shut Down in Cyber Attack
After the cyberattack and the resulting outage, commodity traders booked at least six tankers-provisionally-to start shipping gasoline from Europe to the United States, Reuters reported on Monday, citing data from Refinitiv.
In the U.S. Gulf Coast, refiners including Motiva, Valero, Phillips 66, and PBF Energy are said to have booked tankers for voyage out of the Gulf Coast with options for floating storage, Argus reported on Monday.
Meanwhile, the operator of the Colonial Pipeline said the infrastructure would not return to service in any meaningful way until the end of the week.
Colonial Pipeline will restore the pipeline operations in "a phased approach," it said in a statement on Monday.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com More