(Bloomberg) — Hurricane Isaias is lifting to US Gulf Coast crude prices, with nearly three-quarters of oil production in the region shut in.
Producers halted about 1.46 million barrels a day of output, or 72% of the regional total, the Marine Minerals Administration said on Friday. Workers had evacuated 129 platforms as of 12 p.m. ET, white two dynamically positioned rigs moved out of the storm’s path.
BP Plc shut production and evacuated its Thunder Horse and Na Kika platforms as the hurricane approached. The company also removed nonessential personnel from Argos, Atlantis and Mad Dog platforms.
Isaias, which strengthened into a Category 3 hurricane as it nears the US Gulf Coast, is disrupting offshore supplies at a time when the Iran war has upended global oil trade routes. Longer delivery times for Middle Eastern shipments have tied up tankers, sending the cost of moving American crude to Asia soaring.
Hiring a very large crude carrier to transport US oil to Asia now costs around $79 million, according to the Baltic Exchange. That amounts to roughly $39.50 a barrel for a 2 million barrel cargo, eroding the economics of shipping US crude overseas.
With freight costs weighing on export demand, the offshore production losses could limit the buildup of barrels that would otherwise struggle to find buyers abroad.
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