I posted some stuff on privateers recently in another
thread, about how the blockade system works for privateers and in part compares to wartime blockades. Questions about privateers seem to come up quite often, and it doesn't seems like many know how they work so it might be worth adding. I've done a little more playing with WB and ingame since and found out more too.
Would it be better to make an article on the mechanics of blockades?
Most of it has been mentioned by Tephros , but I did it with examples
I agree that the world politics has a huge effect on privateers and privateers can have a huge effect on it (dno if blockades actually cancel deals if they do they'll be even stronger).
-Trade embargoes can be significantly more damaging if you use privateers to prevent any overseas allies trading with someone, you don't even need to go close to the cities so can be done with decent safety even in the modern age.
-Your trades can always pass through your privateers blockades (both ways). Found this while attempting something I thought could be a major exploit!

But it didnt work
Your trade routes can pass out for profit but rival civs trade routes to you are blocked, 1 way trade benefits are fun
-If you blockade the map top to bottom on both sides of your continent (continents map but you can modify a bit and It'll work on any non-pangea) you can cut all trade between continents (except to you!). This likely means all the big juicy routes go to you (possibly hurts AI diplo too) and that the AI will have more resources to trade with you

. With a blockade box that is 7*7 this doesn't take as many privateers as you might expect.
Tested and it took 8 to blockade top to bottom on a continents large map so 16 can royally screw the world trade network by blockading an entire continent without even being close to it! Again seems fairly doable when the AI has destroyers as you don't need to get chased around.