Hurricane Michael halts 40% of US Gulf oil production

Almost 40 percent of the crude oil production in the US Gulf of Mexico has been shut down because of Hurricane Michael, according to media reports.

The storm on Tuesday intensified to Category 3, meaning winds of up to 210 kilometers per hour and an expectation of “devastating damage,” Financial Times (FT) reported.

Oil companies have evacuated 75 platforms, and by Tuesday had shut down 670,000 barrels a day of production, about 40 percent of the total in the US gulf, according to S&P Global Platts.

About 30 percent of the Gulf’s natural gas production had also been halted. According to the US Energy Information Administration, 66 percent of crude oil and 42 percent of natural gas production in the Gulf of Mexico comes from wells in the Mississippi Canyon and Green Canyon lease areas, both located southeast of Louisiana.

A storm passing through these high-producing areas can have a large effect on total offshore production. Storms that make landfall and damage onshore infrastructure, such as storage facilities and gathering lines, can have a longer-lasting effect on production than storms that only affect a producing area.

Brent crude futures were last down 0.42 percent at $84.64 per barrel (bbl), while US WTI crude was 0.41 percent lower at $74.65/bbl.