Oil settles higher as Isaias shuts 71% of Gulf output
Oil prices ended Friday higher after Hurricane Isaias forced companies to shut in more than 70% of U.S. Gulf of Mexico crude production. Prices had dipped earlier when President Trump said talks with Iran were productive. About 1.46 million barrels a day were offline, the most of the storm so far.
Oil prices finished Friday higher, as the hurricane in the Gulf of Mexico outweighed hopeful words about Iran.
Reuters reported that crude rose on Friday after oil companies shut nearly two-thirds of production in U.S. Gulf waters. Earlier in the day, prices had slipped. President Donald Trump said talks with Iran to end the war in the Middle East had been "productive." He also said the U.S. would not attack Iran before next month's midterm elections, The National reported.
The storm is the main reason supply looks tight. OilPrice.com reported that the Marine Minerals Administration counted 1,458,814 barrels a day shut in on Friday. That is 71.5% of current Gulf oil output. About 59% of Gulf natural gas output was also offline. On Tuesday, before Isaias became a hurricane, only about 9% of Gulf oil was shut in.
Refineries are a second worry. CNBC reported that the storm's path could affect Chevron's refinery in Pascagoula, Mississippi, and a Vertex refinery in Saraland, Alabama. Together they can make about 466,000 barrels a day, or 2.4% of U.S. refining capacity, according to Andy Lipow of Lipow Oil Associates.
The backdrop was already tense. The National said Brent crude jumped more than 4% on Thursday to above $104 a barrel. Attacks on ships near the Strait of Hormuz have picked up this week. The U.S. Treasury also sanctioned 17 vessels it says carried Iranian oil to Asia.
Why it matters: higher crude and tight diesel supply feed into prices at the pump and into costs for airlines and truckers. Trump also said he was weighing a pause in the federal gasoline tax, Reuters reported.
What to watch: Isaias weakened quickly after landfall Friday night. Producers usually restart Gulf platforms over several days once crews can return, so the shut-in numbers should start to fall next week.
What we know: Oil rose Friday with about 71% of Gulf oil output shut in.
What we don't: How quickly Gulf platforms will restart after Isaias.
Where outlets agree OilPrice.com and CNBC both report that Hurricane Isaias forced companies to shut in more than 1 million barrels a day of U.S. Gulf oil production.
Where they differ The outlets cited here report the same key facts so far.