Oil Prices Surge Above $60 Following Evacuation Of Gulf Platforms Ahead Of Storm
Prices of oil in the United States surged above $60 per barrel on Wednesday following the mass evacuation of personnel on major oil platforms in the Gulf of Mexico. US oil producers announced earlier in the week that they would be evacuating their employees ahead of a possibly massive storm, currently called Tropical Storm Barry. The tropical storm headed for the Gulf is expected to form into a hurricane by the end of the week.
US oil producers, including BP, BHP, Chevron, and Shell, have already moved their staff to safer locations and away from the possible path of the storm. Meanwhile, Exxon has announced that they will be holding off evacuations while actively monitoring the weather's development. The company did state that they would be evacuating their personnel if any of their platforms are within the path of the developing storm.
Chevron has evacuated personnel from at least five platforms in the Gulf of Mexico, with plans to evacuate the sixth platform. Shell evacuated four of its platforms. BP evacuated staff from four of its platforms, while BHP evacuated staff from two of its platforms. The evacuation of the platforms is expected to collectively reduce oil production in the Gulf by hundreds of thousands of barrels per day.
Oil platforms in the Gulf of Mexico account for 17 percent of the United States' total oil production. Temporary shutdowns of these platforms usually result in billions of dollars in losses for the companies. When hurricane Michael hit the Gulf last year, production in the region was cut by over 700,000 barrels per day for almost a week.
Fears of a possible reduction in production after the storm hits later this week and possible reductions within this year's hurricane season have resulted in the increase of oil prices throughout the United States. US oil surged slightly above $60 a barrel on Wednesday, hitting a high of around $60.43 per barrel.
The National Hurricane Center is expecting Tropical Storm Barry to form into a hurricane on the weekend, right when it hits the Gulf of Mexico. The hurricane is also predicted to make landfall in Louisiana. A report from the Colorado State University predicts that there could be as many as 14 storms and six hurricanes hitting the Gulf for this year's hurricane season.
The report revealed more of the same number of storms as the previous years. The region is typically his by an average of 12 storms per hurricane season, with around three of them being major hurricanes that are higher than Category 3 in strength.