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Oil prices slump as Colonial Pipeline reopens after cyber attack

The 17,000 tonne Brent Alpha Topside Oil Rig is brought into the River Tees on the Allseas 200m long wide cargo barge the Iron Lady at South Gare, Redcar for dismantling at the Able UK yard, Hartlepool, County Durham, UK, on June 24, 2020. (Photo by Trevor Wilkinson/MI News/NurPhoto via Getty Images)
Brent crude oil, which flatlined this week on the back of the news, was more than 2% lower at $67.68 on Thursday. Photo: Trevor Wilkinson/MI News/NurPhoto via Getty Images

The reopening of a major US fuel pipeline pushed oil prices lower on Thursday. The Colonial Pipeline reopened after a cyber attack caused it to temporarily shut down earlier in the week.

The oil pipeline running from the Gulf Coast to the Atlantic Northeast was subject to a ransomware attack, which forced the US government to declare a state of emergency across many east coast states.

Colonial Pipeline, the company that runs the passage, carries around 2.5 million barrels of refined fuel product per day. This represents 45% of the east coast's supply of diesel, petrol and jet fuel. The incident sparked panic buying in parts of the US.

Brent crude oil (BZ=F), which had traded higher on the news, was more than 2% lower at $67.68 on Thursday.

Oil prices fell on Thursday. Chart: Yahoo Finance
Oil prices fell on Thursday. Chart: Yahoo Finance

On Monday, the FBI confirmed that a company called DarkSide was responsible for the cyber attack. The agency is continuing to work with Colonial and other government agencies on the investigation.

Watch: BP's profit tumbles, debt climbs as virus crisis hammers oil demand

Read more: Oil in focus as cyberattack knocks out U.S. pipeline

DarkSide posted a statement on the dark webs saying its goal was "to make money and not create problems for society."

"We do not participate in geopolitics, do not need to tie us with a defined government and look for... our motives," the group said.

The London-based group held almost 100 gigabytes of data hostage and threatened to leak it on the internet.

The pipeline attack was the second major supply shock to energy markets this year, following a blockage in the Suez Canal that held up movement from both sides for six days.

Read more: Firms start rerouting vessels as ship blocking Suez Canal could take weeks to free

While the DarkSide attack temporarily boosted prices by restricting supply, the International Energy Agency (IEA) this week cut its forecasts for oil demand in 2021.

"Global oil consumption is now forecast to rise by 5.4 mb/d in 2021, 270 kb/d lower than in our previous Report," the IEA said its its May report.

The agency blamed India's recent COVID-19 outbreak for much of the downgrade but also cut forecasts for Europe and the Americas.

Watch: Colonial restarts gas pipeline following cyberattack