Oil prices increased by 2% early Thursday morning as Tropical Storm Francine made landfall in Louisiana.
Earlier this week, reports indicated that Gulf Coast operators were evacuating crews from offshore platforms in preparation for the storm. Major oil companies, including Chevron, Shell, and Exxon, halted operations on some platforms to brace for the impact.
Woodside Energy also shut down one of its offshore platforms in the Gulf of Mexico ahead of the storm’s arrival.
On Tuesday, Reuters reported that Exxon planned to cut production at its 522,500-barrel-per-day facility to just 20% of its capacity in anticipation of Francine. An Exxon spokesperson told Reuters, “We’re closely monitoring and preparing for severe weather that may impact our Baton Rouge operations. Our primary focus is the safety of our workforce and communities in the affected areas. We continue to meet customer commitments.”
In Louisiana, six refineries reduced their operating rates and operated with minimal staff before the storm hit.
Port Fouchon, which supplies equipment to offshore platforms, and the Louisiana Offshore Oil Port were closed ahead of the storm, as reported by Reuters. Additionally, five other ports in Louisiana, including New Orleans, Plaquemines, Cameron, Lake Charles, and Houma, remained closed.
An analyst from East Daley Analytics warned that the hurricane’s effects on oil and gas production could last up to two weeks. However, since Francine made landfall as a Category 2 storm, the impact might be shorter. Louisiana’s Governor has declared a state of emergency.
Despite the disruptions, the immediate effect on oil prices has been limited. MarketWatch reported that traders are more concerned about the potential for oversupply due to falling demand. Colin Cieszynski from SIA Wealth Management noted, “In this scenario, supply reductions are less significant compared to periods of high demand.”