Hurricanes Laura and Marco Shut Down Gulf Oil Production
August 25, 2020
Crude oil and refined fuels products closed higher yesterday driven by the news of Hurricane Marco and Laura, which has shut in offshore production and onshore refinery operations. Gasoline seems to be the big concern as at one point yesterday it was up almost $0.10 cents. It is being reported that 82% of Gulf oil production has been shut in and many major refineries are closing taking roughly 1.5 million barrels per day of refining capacity offline. The energy markets continue to trade higher as it watches Laura grow in strength and is projected to make landfall as a possible Category 2 or 3 hurricane.
Iraq said it would cut its oil production by another 400,000 bpd in both August and September to compensate for its overproduction in the past three months. Iraq’s Oil Minister, Ihsan Abdul Jabbar, said in a joint statement with his Saudi counterpart, Price Abdulaziz bin Salman, that Iraq’s output cut was in addition to the 850,000 bpd it has committed to cut in August and September under an OPEC+ supply pact.
US and Chinese officials have reaffirmed their commitments to Phase one of the trade deal. US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He yesterday evening, with both sides reaffirming their commitment. This is a positive and should be supportive to markets.