The weakening of the US dollar and the threat of a disruption in crude oil supply in the Gulf of Mexico due to Hurricane Ian pushed prices higher on Tuesday.
Brent crude rose $2.21, or 2.6 percent, to $86.27 per barrel yesterday, while West Texas Intermediate (WTI) crude rose $1.79, or 2%, to $78.50 per barrel.
US offshore oil producers said they were monitoring Hurricane Ian’s progress as the powerful storm shut down about 11% of oil production in the US Gulf of Mexico as it approached Florida.
The hurricane made landfall in the US Gulf of Mexico on Tuesday and is expected to strengthen to a Category 4 storm over the warm waters of the Gulf.
According to the offshore regulator, the Bureau of Safety and Environmental Enforcement, 190,000 barrels per day of oil production, or 11% of the Gulf’s total, were shut down (BSEE). Natural gas producers lost 184 million cubic feet, or nearly 9% of daily output.
According to BSEE, personnel were evacuated from 14 production platforms and rigs.
It is the first hurricane of the year to disrupt oil and gas production in the United States’ Gulf of Mexico, which produces about 15% of the country’s crude oil and 5% of its dry natural gas.
The US Dollar, which has weakened from a 20-year high, has also aided oil prices. A strong US dollar raises the cost of crude for buyers using other currencies.
The recent drop in oil prices has fueled speculation that the Organization of Petroleum Exporting Countries and its allies (OPEC+) may intervene. Iraq’s oil minister said on Monday that the group kept an eye on prices and did not want them to skyrocket or plummet.
OPEC+ may take action to halt the price drop by reducing supply, which would also provide support. On October 5, the alliance will meet to establish policy.
According to sources familiar with Russian thinking, Russia will likely propose at the next OPEC+ meeting that the group cut 1 million barrels per day from the group’s collective output.
