Hurricane Isaias halts nearly three-quarters of Gulf oil output as crude prices rise

Hurricane Isaias has forced the shutdown of nearly three-quarters of oil production in the US Gulf region, lifting crude prices. Producers stopped about 1.46 million barrels a day of output, which is 72 percent of the regional total.

Evacuations

According to the Marine Minerals Administration, workers had cleared out from 129 platforms by 12 p.m. Eastern Time on Friday. Two dynamically positioned rigs also moved away from the storm path. BP Plc shut production and evacuated its Thunder Horse and Na Kika platforms, while also removing nonessential staff from Argos, Atlantis and Mad Dog facilities. NPR reported that Shell and BP evacuated personnel from deepwater platforms, while Chevron evacuated offshore drilling rigs and Exxon stated its operations were normal while monitoring the weather.

Market Impact

Debnil Chowdhury, head of Americas refining at S&P Global Energy, noted the storm could have been worse as it heads east rather than west toward the bulk of refineries. Bryan Domangue, Gulf of America region director for the Marine Minerals Administration, explained that operators shut off safety valves below the ocean floor and moved mobile drilling facilities. Meanwhile, high freight costs to transport US oil to Asia have reached around $79 million for a very large crude carrier via the Baltic Exchange, amounting to roughly $39.50 a barrel for a 2 million barrel cargo.

Context

Hurricanes frequently threaten Gulf oil infrastructure during storm season, though the industry routinely uses safety shutdowns and platform evacuations to protect workers and equipment. Past storms like Katrina and Rita caused historic damage to offshore facilities, while more recent hurricanes have also temporarily halted regional production.