Hurricane Ida knocked off a large portion of the United States Oil Production and refining activities, expected to keep crude and retail gasoline prices high. Now a tropical storm, Ida rushed through the Gulf of Mexico producing area before crashing into the Louisiana shore as a Category 4 hurricane on Sunday, dumping torrential rain, strong gusts, and high tides. Early Monday, more than 1 million Louisiana utility customers were without electricity.
The energy industry was working Monday to determine when it would be possible to restart refining operations in Louisiana and oil and gas production in the Gulf of Mexico, which had been shut down as a precaution. After a 10% increase last week, oil prices were slightly higher on Monday. However, West Texas Intermediate futures are still down over 6.5 percent for the month, trading at around $69 per barrel. Almost all Gulf of Mexico Oil Production was halted, amounting to nearly 15% of total US output.
If no damage is discovered, the shut-in activities in the Gulf of Mexico should resume. The hurricane’s impact on supplies coincides with OPEC+’s meeting this week. OPEC+ is widely likely to continue the 400,000 barrels per day of production it promised to return to the market before. The Biden administration had requested more supply from Saudi Arabia and OPEC.
However, the cartel and its allies, including Russia, are anticipated to return only the amount of oil initially intended to the market. As a result, crude stockpiles have dropped to their lowest level since January 2020. According to data issued this week by the Energy Information Administration, crude supply has declined for three weeks in a row, while fuel demand has risen to its highest level since March 2020.