The impact of Hurricane Ida – which made landfall in Louisiana on Sunday before barrelling through other parts of the US – could push up crude oil prices in the global market as production and refining facilities are being disrupted.
With winds of 150mph, the Category 4 hurricane hit the southern US – blowing the roofs off buildings and knocking out power to New Orleans – before downgrading to a tropical storm.
“Ida ... caused more than 95 per cent of the Gulf of Mexico’s oil production to shut down, regulators said Sunday, indicating the hurricane is having a significant impact on energy supply,” CNN reported on Monday.
The price of crude this week fluctuated between $65 to $70 per barrel as “Hurricane Ida temporarily shut down a critical swath of US oil production and refining operation, and that should keep crude and retail gasoline prices at an already elevated level,” CNBC also reported on Monday.
Despite concerns remaining over the Covid-19 Delta variant putting crude in a long-term downtrend prospect, the damage caused by Hurricane Ida could threaten the scale of oil production, raising its price.
US oil prices could rise slightly due to the effects of Hurricane Ida after it swept through Louisiana, forcing the shutdown of refining operations and oil production in the Gulf of Mexico.
Oil prices were slightly higher after surging 10 per cent last week, as the market was weighing the impact of the hurricane on supplies of both oil and gasoline, CNBC added.
“Crude oil prices could rise further if OPEC+ stops adding barrels to global supply, which is a possibility after the cartel’s next meeting,” reported Oilprice.com, citing Kuwaiti Oil Minister Mohammed Al Fares as quoted by Reuters on Monday.
The energy industry website added: “OPEC+ had agreed to boost oil production by 400,000 bpd every month beginning August until the group’s combined output reached pre-agreement levels towards the end of next year. But now that demand concerns are once again coming to the fore, OPEC+ is signalling that it is always ready to change tack.”
However, Oilprice.com’s Tsvetana Paraskova said on Tuesday that investors should still pay attention to long-term trading as “the surge in Covid cases globally could slow oil demand recovery, which will not leave much upside for oil prices for the rest of 2021, analysts told the monthly Reuters poll, revising down their forecast for this year for the first time since November.”
Longer term, with production push likely to stay still, oil prices may fall to around $50 per barrel in the next three months based on technical analysis.