On Wednesday, after Hurricane Isaias strengthened into a tropical storm in warm waters off Mexico's eastern coast, potentially affected coastal communities quickly activated disaster preparedness measures. Some oil wells in the Gulf of Mexico suspended production, and the governors of Florida and Alabama declared states of emergency in dozens of counties.
Isaias is expected to strike a large coastal area already damaged by multiple strong hurricanes. Prior to the storm's arrival, Gulf of Mexico oil and gas producers had already shut down a significant proportion of their offshore production facilities. The region accounts for nearly 15% of total annual U.S. crude oil production.
According to data from the U.S. Marine Minerals Administration, as of Wednesday, approximately 25% of crude oil production in the Gulf of Mexico had been temporarily halted, equivalent to a reduction of about 511,000 barrels of crude oil supply per day. Of the 371 manned offshore oil platforms in the region, eight had completed the evacuation of personnel.
Jim Burkhard, head of global oil market research at S&P Global Energy, said the production cuts are significant enough to impact the market given current high oil prices, despite previous Gulf Coast hurricanes causing larger supply disruptions.
He believes a greater concern is whether Isaias will strike a region with high concentrations of refineries with strong winds. In an email, Burkhard stated: "I think the risks to the oil market are currently at a moderate level, but they are rising."
