So what do the Somali pirates intend to do with the tankers of crude they have hijacked?

[Omar_Little]

Two different oil tankers have been seizedby Somali pirates in the Indian Ocean in the past two days.

I can understand about other ships hijacked, that carried other types of cargo, that can be sold off piece by piece or larger chunks. But there’s a limited market for $260 million of crude oil. Are they only seeking a ransom payment from the sellers of the oil?

What’s the value of the crude cargos to the pirates?

[Duckster]

@Omar_Little

What’s the value of the crude cargos to the pirates?

Power over those who want it.

[Omar_Little]

@Duckster

Power over those who want it.

All this will ultmimately do is temporarily raise the price of refined products in the countries that were importing those particular cargos.

[Omar_Little]

If I had just read further in the article. I could have answered my own question:

The main problem, warns Mr. O’Kennedy, is that piracy is too lucrative an enterprise to be discouraged by the presence of the multinational navies operating in the region.

“What we are dealing with here is a business model that is so good, that for a matter of tens of thousands of dollars you can put together a pirate action group, you can send it to sea and if you are lucky and hit the jackpot, you can come back with a vessel that within six months will bring you a return of nine-and-a-half million dollars.”

“We are the first to admit we are not deterring piracy.”

The BBC notes that currently at least 30 ships and more than 700 crew members are being held by Somali pirates awaiting ransoms.

O’Kennedy’s concerns are echoed by John Drake, a senior risk consultant for London-based security firm AKE, reports Reuters. “With rising ransoms, pirates are able to hire more men, bribe more officials and wait longer periods to negotiate,” he said.

For shippers and producers, it appears that it has become the cost of doing business in the region. Until they quit paying the ransoms, it will continue.