Oil prices rise as storms head towards Gulf of Mexico

24 August 2020 (Last Updated August 24th, 2020 12:06)

Oil prices have increased as a twin storm threat bore down on the Gulf of Mexico, closing more than half of the oil production in the region.

Oil prices rise as storms head towards Gulf of Mexico
The Gulf of Mexico accounts for nearly 17% of total oil production in the US. Credit: Rab Lawrence via Flickr.

Oil prices have increased as a twin storm threat bore down on the Gulf of Mexico, closing more than half of the oil production in the region.

Brent futures gained $0.09, or 0.2%, to $44.44 a barrel while US West Texas Intermediate (WTI) crude rose by $0.09, or 0.2%, to $42.43 a barrel, Reuters reported.

On 23 August, Hurricane Marco and Tropical Storm Laura hit through the Caribbean and the Gulf of Mexico.

Energy firms pulled workers from offshore platforms and shut down oil production, which accounted for 58% of Gulf oil production and 45% of its natural gas output.

Gulf of Mexico accounts for nearly 17% of total oil production in the US and 5% of the country’s natural gas output.

OANDA New York senior market analyst Edward Moya was quoted by the news agency as stating: “Crude prices rose as double trouble in the Atlantic could lead to huge disruptions with oil operations in the Gulf of Mexico.

“Oil’s gains, however, are likely to be muted as virus uncertainty continues to weigh on the crude demand outlook.”

Furthermore, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, urged oil-producing nations that produced above output targets in May-July to reduce further in August and September.

Meanwhile, the US Food and Drug Administration (FDA) has issued an Emergency Use Authorization (EUA) for emergency use of Covid-19 convalescent plasma to treat infected hospitalised patients.