Cheap Oil Now Killing Profits For West African Pirates

Yemisi Izuora/Agency Report
A table with OPEC logo is seen during the presentation of OPEC's 2013 World Oil Outlook in Vienna , November 7, 2013. REUTERS/Leonhard Foeger
Crime in the waters around Africa is on the decline, falling significantly in 2015, as West African pirates have their profits eroded by globally cheap oil.

Instances of piracy in the Gulf of Guinea fell by a third in 2015, representing a steep decline from previous years.

The price of oil has plummeted 75 percent from highs of $108 a barrel in June 2014, shredding the foothold of African pirates in the illegal oil trade. Crude oil prices have stabilized around $30 a barrel but continue to swing unpredictably, reports Bloomberg.

“With oil at a low bottom price of below $30 per barrel, piracy is no longer such a profitable business as it was when prices hit $106 a barrel a few years ago,” Gulf of Guinea Commission Executive Secretary Florentina Adenike Ukonga said.

“The price drop has contributed a great deal in reducing piracy and other maritime crimes in the Gulf of Guinea.”

Oil vessels making shipments in the Gulf of Guinea have long been targets of pirates in the West African region.

Africa’s largest oil producer and OPEC member, Nigeria, uses the waters to make regular shipments to Europe and North America.

The Gulf of Guinea is a key trading route globally but piracy has inflicted heavy losses on oil producers, Nigeria losing hundreds of thousands of barrels of oil per day, reports Business Insider.

Experts are warning that nations and businesses with interests in the region cannot get complacent about security and need to continue partnering with one another to counter the threat of piracy.

U.K.-based shipping consultant Dryad Maritime cautions in a January report that if oil prices rebound to higher levels pirates are likely to step their efforts back up. Morgan Stanley said in January however that $20-$25 a barrel for oil is a possibility in the future.

“In previous years, heavily armed criminal syndicates have conducted the hijacking of larger vessels hundreds of miles from the Nigerian coastline,” read Dryad Maritime’s report.

“One possible explanation for this decline in cargo theft, from the seven reported attacks in 2012, is the reduced financial rewards available from black market oil due to the decline in the global price of oil.

Nonetheless, as with any potential for maritime crime in the region, operators of product tankers should not become complacent to the risk of further attacks.”

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