Hurricane Isaias Knocks Out 71% of US Gulf Oil Output as Brent Holds Above $100
Hurricane Isaias has shut in nearly 1.46 million barrels per day of US Gulf of Mexico crude, or 71.5% of regional output, while Brent held above $100 on renewed Hormuz tanker attacks and record supertanker freight rates.
Operators had shut in 1,458,814 barrels per day of US Gulf oil and 1.26 billion cubic feet per day of natural gas, equal to 71.51% of Gulf crude output and 58.84% of Gulf gas output, the Marine Minerals Administration said on Friday. That is a further 176,000 barrels per day lost since Thursday, when 1.28 million barrels per day was offline, and compares with just 185,120 barrels per day - 9.24% of production - three days earlier before the storm intensified. Crews have evacuated 129 production platforms, close to 35% of the 371 manned platforms in the Gulf, along with eight of 11 non-dynamically positioned rigs and two of 17 dynamically positioned rigs. Offshore operators routinely restart output once storms pass, so how long the barrels stay out depends on inspection results and any damage to platforms, subsea equipment, pipelines or onshore infrastructure.
The shutdown lands in a market with little spare cushion. Brent crude was trading at $102.83 a barrel and West Texas Intermediate at $90.33 as of Friday, both higher than their opening levels for the week, with Brent holding above $100 even as reports of productive US-Iran talks failed to calm the benchmarks. Kpler analysts counted only seven commodity carriers transiting the Strait of Hormuz on Tuesday, the lowest figure since late July, with crude crossings down 27% from the prior week to at least 10.1 million barrels a day. Between September 28 and October 2 there were at least 12 attacks on tankers carrying crude oil, liquid petroleum gas and liquefied natural gas, and the US sanctioned 17 additional tankers carrying Iranian crude, fuels and petrochemicals.
Freight has become a second source of upward pressure. Record rates offered for Persian Gulf routes have pulled tonnage into ship-to-ship transfers, tightening vessel availability for other trades and lifting physical delivery prices, with supertanker rates reported at a record $1.4 million a day. US commercial crude stocks stood at 424.1 million barrels as of October 2, about 0.6% above the five-year average, but gasoline stocks were 6.4% below and distillate stocks 12.3% below their five-year norms, leaving product markets far tighter than the crude balance suggests. Refinery utilisation was 92.7% and US crude production held near 14.0 million barrels per day.
The combination of a weather-driven US supply outage, a security-driven Hormuz discount and a freight squeeze leaves the prompt physical complex supported even as headline futures drift. Any rapid restart of Gulf platforms would ease the crude side quickly, but restocking distillate to normal levels requires sustained refinery runs rather than a single week of high utilisation, and the tanker shortage is not something operators can resolve before the next round of cargoes is fixed.