Oil's terrorist threats

Jan. 10, 2005
Osama bin Laden exercises a powerful impact on world oil markets.

Osama bin Laden exercises a powerful impact on world oil markets. After all, his followers blasted a hole in the tanker Limburg off Yemen a few years back, killing a crewman, spilling tons of oil, and nearly sinking the ship.

Now he's at it again.

"Take jihad [holy war] to stop [the Americans] getting hold of [the oil]. Concentrate your operations on the oil, in particular in Iraq and the [Persian] Gulf," Bin Laden said in a tape-recorded message to followers in December.

Saudi Aramco paid heed, saying security measures had been tightened around the company's facilities and personnel. Aramco said company security staff members were on full alert, with more than 5,000 security employees working around the clock using helicopters, boats, and other hi-tech equipment.

Still, the futures price of crude oil on the New York Mercantile Exchange rose almost 5% to $46.28/bbl partly in response to Bin Laden's call. And prices spiked a bit higher after militant attacks in Saudi Arabia exacerbated market fears that oil supplies might be disrupted in the world's leading crude exporter.

No follow-up?

But some analysts soon suggested those strikes were no longer affecting the market, despite lingering concerns sparked by Bin Laden's call for jihad on oil facilities. "The market was panicked, but fears essentially evaporated...since there was no follow-up," said one energy economist.

No follow-up? Iraq's key oil infrastructure suffered five attacks in 24 hr after the voice identified as Bin Laden's ordered his terrorist followers to sabotage the West's key oil supplies.

Perhaps that energy economist also failed to read recent news from Iraq, where oil exports stood at an average of 1.55 million b/d during 2004, about 300,000 b/d below the targeted level.

"The failure to reach that planned level was due to increasing sabotage to oil pipelines, wells, and other oil installations," said Dhiaa al-Bakkaa, the head of Iraq's State Oil Marketing Organization. Bakkaa said that the country had failed to export an average of 300,000 b/d, or 110 million bbl over all of 2004, due to sabotage and security problems.

"We want to tell the Iraqi people that there is an all-out war against the country's oil infrastructure," said Oil Minister Thamir al-Ghadhban as he toured the 110,000 b/cd Daura refinery, damaged by mortar fire from insurgents.

Responsibility claimed

Responsibility for that attack was claimed by an Islamic militant group loyal to Bin Laden, the Al-Qaeda Organization of Mesopotamia, in a leaflet distributed in nearby Baiji. The leaflet said sabotage was carried out in response to the message from the Al-Qaeda "supreme commander."

No follow-up? The terrorist acts in Iraq are costing hundred of millions of dollars. When Bin Laden speaks, his followers listen. And act. Smart oil people also need to listen. And learn. The Bin Laden threat persists. Indeed, as Iraq's Ghadhban sees it, "I don't see an imminent or swift end to this crisis."