Ida Hit Crushes Crude Output In Gulf Of Mexico, Ranked Worst In 16 Years
Hurricane Ida’s disruption to the U.S. offshore energy production in the Gulf of Mexico is the worst in 16 years. It has already stressed domestic and global supply chains, further testing the Federal Reserve’s “transitory” inflation narrative.
Gulf Coast hurricanes usually cause minor disruptions in offshore oil and gas production, but this time around, output from the region has been significantly reduced due to Ida’s 150 mph winds that damaged platforms and onshore support facilities.
What this will mean is a long recovery for offshore energy production to return. Reuters notes 79% of the region’s offshore oil production remains offline.
Since the first oil platforms were evacuated ahead of Ida, there’s been a loss of 17.5 million barrels of oil. Some energy analysts are expecting U.S. production could drop by 30 million barrels this year due to the sluggish return.
“After Katrina, which made landfall 16 years ago on the same day as Ida did this year, it was well into the following year before oil production resumed its normal level,” Commerzbank analyst Carsten Fritsch told clients. “That said, Katrina was followed shortly after by another devastating hurricane, namely Rita.”
There is currently a disturbance in the Gulf of Mexico that has a 50% chance of developing over the next two days.
The outage has left a noticeable imprint on NYMEX West Texas Intermediate futures hovering around the $70 handle, up more than 11% since weather models first forecasted Ida would make landfall around the Louisiana region.
There’s no clear timeline when full production will return. “There could be volumes that are offline for a considerable amount of time,” said Facts Global Energy (FGE) consultant Krista Kuhl. “It’s just too early to tell.”
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