New York () — Hurricane Ian is not expected to pose much of a threat to the nation’s oil and gasoline supplies, even if the category three storm derails some oil production in the Gulf of Mexico.
Oil prices rose 2.4% on Tuesday morning, although they remain near eight-month lows and have fallen sharply in the past week.
Hurricane Ian is looming over western and central Florida with powerful 201 km/h winds.
Although there could be localized supply problems in Florida from the storm, Hurricane Ian does not appear to be a major risk to the nation’s oil and gasoline supply, largely because Florida is not a major producer or refiner.
Importantly, the Gulf Coast hub of refineries and producers is not in the path of the storm, as currently forecast.
“It’s not going to be a significant event for the global oil market,” said Michael Tran, commodity and digital intelligence strategist at RBC Capital Markets.
However, forecasters say Hurricane Ian’s path remains uncertain and a shift to the west would turn things around by impacting additional oil production in the Gulf of Mexico and the nation’s vital refining hub in Louisiana and Texas.
“The biggest risk would be that the trajectory would change and drift west,” said Bob McNally, president of consultancy Rapidan Energy Group. “So far, I don’t see much of an impact.”
BP and Chevron announced late Monday the evacuation of personnel from offshore oil and natural gas fields in the Gulf of Mexico due to Hurricane Ian.
These evacuations have affected the production of some 485,000 barrels per day of oil, which is 27% of the oil production of the Gulf of Mexico, according to veteran oil analyst Andy Lipow. For context, this equates to less than 5% of total US daily oil production.
Lipow said delays in the supply of gasoline, jet fuel and diesel to the Florida market are possible due to Hurricane Ian, especially if Tampa’s refinery terminals are damaged by high winds and flooding. Severe flooding could put these terminals out of service for weeks, Lipow said.
Analysts said Tuesday’s jump in oil prices may be in part a response to work halted on platforms in the Gulf of Mexico. But it also comes after a series of heavy losses and as the stock market recovers from the recent sell-off.
In addition, markets are keeping an eye on speculation that OPEC and its allies could announce production cut plans next week. Another factor: the US dollar is losing ground and that tends to boost dollar-priced commodities like oil.
Gasoline prices have risen in recent days, although that trend began before the formation of Hurricane Ian. The national average for regular gasoline is now $3.75 a gallon, down from a recent low of $3.67, according to the American Automobile Association (AAA).
“The national price of gasoline has increased, but it is not due to the hurricane,” Lipow wrote in an email.