Skiff loaded with armed Somali pirates. (image: scrapetv.com)

As reported by the Associated Press Monday, Somali pirates launched an ambitious attack on an oil tanker, 1,000 miles from shore. Two skiffs loaded with pirates armed with automatic weaponry and RPGs closed on a Hong Kong-flagged tanker in the Indian Ocean. The pirates fired on the tanker, which-as improbable as it seems for a ship the size of a small town-took evasive action and escaped.

This was hardly the first attack on an oil tanker. For example, early this year, pirates successfully ransomed a tanker, an event which focused world attention on the threat Somali pirates pose to trade. In contrast to pirates of old, who made their money primarily by stealing cargo, modern-day pirates often try to profit by holding vessels for ransom.

If pirate attacks on tankers become more common, they could have an impact on world oil prices. As our Gregg Gethard recently explained in the context of attacks on oil infrastructure by Nigerian rebels, military or paramilitary assaults on oil production and transportation raise prices two ways:

• The lesser impact comes from the actual disruption in the oil supply; lesser because the ability of any one rebel or pirate group to make substantial inroads on world oil supply is limited.

• The greater impact comes, as almost always, from psychology. The attacks cause investors and speculators to anticipate disruption of oil supplies. In response to that fear-or seeking to profit by it-they look to acquire or control more oil, bidding up prices and tightening supply more than the rebels or pirates themselves ever could.

The capture of a Saudi tanker in November 2008 was followed by a $1 rise in the price of crude, neatly illustrating the point.