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Colonial Pipeline blames ransomware for network shutdown

Colonial Pipeline says it transports 45 percent of East Coast fuel supply.
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/ Source: Reuters

Top U.S. fuel pipeline operator Colonial Pipeline has shut its entire network after a cyberattack, the company said in a statement on Friday.

Colonial's network supplies fuel from U.S refiners on the Gulf Coast to the populous eastern and southern United States. The company transports 2.5 million barrels per day of gasoline, diesel, jet fuel and other refined products through 5,500 miles of pipelines.

Colonial Pipeline says it transports 45 percent of East Coast fuel supply.

In a subsequent statement Saturday it blamed ransomware.

"We have since determined that this incident involves ransomware," Colonial Pipeline said. "In response, we proactively took certain systems offline to contain the threat, which has temporarily halted all pipeline operations, and affected some of our IT systems."

The company learned of the attack on Friday and took systems offline to contain the threat, it said in the Friday statement. That action has temporarily halted operations and affected some of its IT systems, it said.

The attack was under investigation by "a leading, third-party cybersecurity firm," the company said Saturday.

Colonial has contacted law enforcement and other federal agencies, the company said. It is working on getting interrupted service restarted.

"At this time, our primary focus is the safe and efficient restoration of our service and our efforts to return to normal operation," the company said Saturday. "This process is already underway, and we are working diligently to address this matter and to minimize disruption to our customers and those who rely on Colonial Pipeline."

The operator had shut its main gasoline and distillate lines, Reuters reported earlier on Friday.

During the trading session on Friday, Gulf Coast cash prices for gasoline and diesel edged lower.

Both gasoline and diesel futures on the New York Mercantile Exchange rose more than crude prices during the day. Gasoline futures gained 0.6 percent to settle at $2.1269 a gallon, while diesel futures rose 1.1 percent to settle at $2.0106 a gallon.

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Longer-term price effects will depend on the amount of time that the lines are shut. If barrels are not able to make it onto the lines, Gulf Coast prices could weaken further, while prices in New York Harbor could rise, one market participant said.

Colonial significantly shut down its gasoline and distillate lines during Hurricane Harvey, which hit the Gulf Coast in 2017.

During that time, spot Gulf Coast gasoline prices rose to a five-year high, while diesel prices rose to around a four-year high.