Rystad Energy’s initial assessment of Hurricane Ida’s impact on US oil production and refinery capacity estimates a peak daily supply curtailment of 1.8 mmbbl per day (bpd) in the Gulf of Mexico
Based on reported power outages and the closure of refineries in preparation for the storm, nearly 2 million bpd of US Gulf Coast refining capacity is estimated to be currently offline.
As was the case with major hurricane and storm events during the 2016-2020 period, Rystab Energy estimate the cumulative production outage impact to be equivalent to 5.5 days of maximum capacity, assuming rapid reactivation to start as soon as 31 August and 1 September.
This will result in an impact of approximately 215,000 bpd and 127,000 bpd on monthly averages for August and September, respectively. However, a certain downside supply risk is present, relating both to additional weather disruptions as Rystab Energy remain in the middle of hurricane season and to delayed reactivation of some facilities.
Based on reported power outages and the closure of refineries in preparation for the storm, nearly two million bpd of US Gulf Coast refining capacity is currently offline due to Hurricane Ida. As Ida has been downgraded from Category 4 to Category 1 and is moving northeast, Rystab Energy expect the worst impact to have passed and estimate that refineries will remain offline for between seven and 14 days maximum, depending on the extent of damage due to flooding.
“We see a risk that the loss of US refinery demand will be greater and more prolonged than the loss of crude supply, which, depending on the extent of refinery shut-ins and power outages, could further weaken the flat price, the structure for WTI and potentially WTI-Brent further for both September and possibly October 2021,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
