Xinhua News Agency quoted Reuters yesterday as reporting that as of September 6, local time, 88% of offshore oil production operations in areas hit by Hurricane Ida were still suspended, and more than 100 drilling platforms were idle.
The U.S. Bureau of Safety and Environmental Enforcement (BSEE) said energy companies have been working to restore production after Hurricane Ida damaged production platforms and caused power outages, but there are still daily About 1.5 million barrels of oil production capacity is offline, and an additional 1.8 billion cubic feet per day of natural gas production, or 81%, is also offline.
U.S. government data shows that in the ten days since Hurricane Ida made landfall in the southern United States on the 29th of last month, it has caused 16.8 million barrels of damage to the region’s crude oil industry, which is more than All tropical storms in U.S. history have caused higher losses over the same period. As of September 6, the average price of regular gasoline in the United States has risen to $3.188 per gallon, a new high since 2014.
It is worth mentioning that this figure is 32% greater than the damage caused by Hurricane Katrina in 2005, which ultimately led to a total reduction in crude oil production on the U.S. Gulf Coast Over 160 million barrels. That year, production disruptions caused by Hurricane Katrina continued into the following year. It remains unclear how long Hurricane Ida’s negative impact on Gulf Coast crude oil production will continue until damage assessments are completed.
According to data released by the General Administration of Customs on September 7, from a year-on-year perspective, in August this year, the import volume of refined oil reached 2.928 million tons, a year-on-year increase of 50.0%; August imports Crude oil increased by 3.288 million tons month-on-month.
Last night, international oil prices fell short-term. As of this morning’s close, U.S. WTI October crude oil futures closed down 1.35% at $68.35 per barrel, falling for two consecutive trading days. , the biggest drop since last Friday, August 27. Brent crude oil futures for November closed down 0.73% at $71.69 per barrel, closing down for three consecutive days.
What impact will Hurricane Ida have on global crude oil supply?
Haizheng Futures analyst Zheng Mengqi believes that since the landfall of Hurricane Ida at the end of August, most offshore oil production operations in the U.S. Gulf of Mexico have been suspended, drilling platforms have been idle, and oil pipelines and seaports have been closed. , oil refineries were also shut down due to power outages, which resulted in catastrophic flooding and traffic paralysis, which had a relatively large impact. According to data released by the U.S. Bureau of Safety and Environmental Enforcement (BSEE), an average of 83% to 95% of the crude oil production capacity in the Gulf of Mexico is shut down every day, affecting crude oil production by as much as 1.53 million to 1.72 million barrels per day, accounting for about 13% of the current U.S. crude oil production. —15%, accounting for approximately 1.6%-1.8% of global crude oil production. Although August to October is the seasonally high season for hurricanes in the United States, the impact of supply reduction this time is far greater than the same period in previous years, and the duration is longer than the same period in previous years.
In the domestic market, Zheng Mengqi said that crude oil imports increased slightly. Domestic import demand has certain support for global crude oil demand, but the small month-on-month increase also shows that import demand is relatively stable. It will not have a big boost to global crude oil demand. The main sources of domestic crude oil imports are still the Middle East and Russia, and domestic crude oil supply is relatively stable. Therefore, the impact of this hurricane on domestic crude oil-related varieties will not be significant.
Why do international oil prices fall instead of rising?
Previously, Saudi Arabia significantly lowered the price of crude oil to Asia. Some overseas institutions pointed out that the supply and demand side of the crude oil spot market in Asia is still weak.
Ruizhid Energy’s head of oil markets said that Saudi Arabia’s reduction of crude oil prices to Asia in October shows that it believes that the supply and demand relationship has changed slightly, and traders must follow this rule today. route. Jeffrey Halley, senior market analyst at OANDA Asia Pacific, believes that although OPEC+ continues to implement plans to increase production month by month, weak data from China and the United States have raised concerns about slowing demand, and Saudi Arabia is seeking market share in the region, and the oil market is very volatile. May continue to be under pressure.
Regarding the current trend of crude oil prices, CITIC Futures analyst Yang Jiaming believes that oil prices fully reflect all current information. Although the current U.S. Bay Area production has not returned, oil prices have already reflected Given the amount of damage caused by the hurricane, if there are no further losses in the future, oil prices will be in a bullish position. Another upward breakthrough in oil prices requires the further impact of the hurricane, such as news that the recovery time has been extended beyond expectations and production has exceeded previous estimates. In the domestic market, my country’s refined oil imports have a low base and are too small compared to domestic consumption, so a surge in imports is of little reference significance. U.S. crude oil production has been cut, mainly in heavy crude oil such as Mars from the Gulf of Mexico, while medium and heavy crude oil prices have risen. Under the influence of hurricanes, the strength of Middle East medium crude oil will also drive the price difference between domestic and foreign SC crude oil to continue to strengthen.
“Although this hurricane has had a certain impact on crude oil production in the U.S. Gulf of Mexico, while the refinery was shut down due to power outages, It has also affected the processing demand for crude oil, and the United States has also eased the supply pressure of crude oil to a certain extent by releasing strategic reserves of crude oil. The impact of the hurricane is expected to be reflected in this week’s EIA data, and oil prices have received a certain Support. Oil prices still need other support to rise again. OPEC+ maintains the production reduction agreement reached earlier and continues to increase production by 400,000 barrels per day month by month. The Fed’s QE policy has been reduced. Crude oil has been priced in. Except for hurricanes, there will be no other support in the short term. Due to bullish factors, oil prices are still mainly operating in oscillations,” Zheng Mengqi said. </p
