Benchmark oil prices hit a five-month high on Wednesday, with the evacuation of hundreds of US offshore oil facilities ahead of Hurricane Laura sparking fears of shortages.
Coastal areas in Texas and Louisiana were bracing for hurricane-force winds and large waves on Wednesday night, with authorities warning of a “life-threatening storm surge” that could reach 30 miles inland and cause widespread flash flooding.
Oil producers evacuated 310 facilities in the Gulf of Mexico, shutting down 85% of offshore output in the ocean basin along the southeastern coast of the US, Reuters reports.
The news pushed widely traded oil futures contracts to their highest prices since early March.
Brent crude (BZ=F) was up 0.4% to $46.05 (£35.04) a barrel at around 9am in London, while West Texas Intermediate crude was up 0.2% to $43.43 (£33.04) a barrel.
Hurricane #Laura continues to move across the central Gulf of Mexico this evening. Our partners at @53rdWRS and @NOAA_HurrHunter are both flying in and around the storm, collecting data that is helping us with our upcoming 10 PM CDT forecast update. pic.twitter.com/yoKQSyYYJo— National Hurricane Center (@NHC_Atlantic) August 26, 2020
Deutsche Bank analysts wrote in a note: “Much of the oil production in the area has already been shut down, and there are obvious concerns of further damage to come.”
"Markets are currently pricing in a possible near-term catastrophic gasoline shortage," said Stephen Innes, chief global markets strategist at AxiCorp, according to Reuters.
The US National Hurricane Centre called for measures to protect life and property to be accelerated, warning of “potentially catastrophic damage” from the storm.
The US government agency said the hurricane was rapidly intensifying, and had wind speeds of up to 105 mph.