On August 29, local time, Hurricane Ida made landfall along the Louisiana coast of the United States with a pressure of 930 millibars. The eye of one of the most powerful storms ever to hit the United States reached Grand Island. nearby. Based on wind speed, it ranks as the fifth most powerful hurricane to make landfall in the United States. The U.S. National Hurricane Center said Hurricane Ida is expected to maintain hurricane status later in the day and tropical storm status until Monday afternoon local time.
U.S. President Biden said that Hurricane Ida is expected to have a catastrophic impact and may threaten people’s lives, and the U.S. government will make every effort to carry out rescue and recovery efforts. .
On the 29th, Hurricane Ida was upgraded to a Category 4 storm. The storm is expected to hit the U.S. coast late Sunday or early Monday, and sea levels could rise as much as 4.5 meters in some places, AFP reported.
Historical data shows that on August 29, 2005, Hurricane Katrina made landfall on the Gulf Coast of Mexico, claiming the lives of at least 1,833 people. Losses totaled $176 billion. At that time, New Orleans, the capital of Louisiana, burst its levees, causing large areas of the city to be flooded. It took many years for the damage caused by the floods to be repaired. Coincidentally, 16 years later, on August 29, 2021, “Ida” will also land in Louisiana. Meteorological experts said that although “Ida” made landfall in the same area, its direction was slightly different from “Katrina”, which would put New Orleans deep into the most dangerous hurricane front zone.
Louisiana Governor Edwards promised the public on the 28th that the tragedy would not happen again. “We are not the state we were 16 years ago.” Edwards said that “Ida” will It was one of the most powerful hurricanes to hit the state since at least the 1850s.
As Hurricane Ida continues to intensify, oil and gas exploration and production companies in the U.S. Gulf of Mexico and refining and chemical plants in Louisiana have suspended production. According to the latest forecast from the National Hurricane Center, Hurricane Ida will make landfall near New Orleans Sunday night into Monday morning. As of Saturday, 91% of crude oil production capacity (equivalent to approximately 1.65 million barrels per day) and 85% of natural gas production capacity were shut down, according to the Bureau of Safety and Environmental Enforcement. Refining and chemical plants along the Mississippi River, with approximately 1.9 million barrels per day of refining capacity (equivalent to 10% of the U.S. total), have shut down or reduced operating rates.
According to reports, U.S. Gulf of Mexico crude oil and natural gas production account for 17% and 5% of total U.S. oil and gas production respectively, and more than 45% of U.S. refining capacity is located on the Gulf Coast.
Bob Yawger, head of energy futures business at Mizuho Securities America, said that based on past experience, crude oil prices will rise as the hurricane approaches. .
Francisco Blanch, head of commodities and derivatives research at Bank of America, said on the 27th that although the number of new coronavirus infections in many countries seems to have peaked, oil Demand correction is facing great uncertainty. Importing countries such as China have temporarily reduced crude oil purchases, while OPEC and partner countries may reconsider plans to increase production month by month.
Haitong Futures Energy and Chemical Director Yang An told the Futures Daily reporter that since the U.S. Gulf of Mexico is a core mining area for offshore crude oil, investors’ immediate reaction is to have a hurricane. Oil prices will rise. However, the impact of hurricanes on oil prices varies greatly in history. Some hurricanes will push up oil prices to a certain extent, but some hurricanes have little impact on oil prices. There have even been cases of oil prices falling after hurricanes.
Hurricane Katrina forced the closure of one-third of the oil fields near the Gulf of Mexico with a total production capacity of 1.5 million barrels, and affected 2.5 million barrels of refinery processing capacity. On August 29, WTI oil prices soared by US$4.67/barrel to US$70.8/barrel, and gasoline prices jumped by more than 30% within a week of Katrina’s landing. From August 25 to September 3, 2017, Hurricane Harvey, which reached Category 4 intensity, swept across the Gulf Coast, forcing refineries in the region to suspend production and waterways and ports to close. In the week ending September 1, 2017, total U.S. Gulf Coast refinery inputs decreased by 3.2 million barrels per day (34%) compared with the previous week, and the weekly refinery utilization rate in the region fell from 96% to 63%. However, because “Harvey” only forced the shutdown of 379,000 barrels/day of crude oil production capacity, the final crude oil price was very different from the changes in gasoline prices. On August 28, gasoline prices once jumped 7%, while crude oil prices maintained a sluggish and oscillating trend.
How much impact will “Ada” have on oil prices? Yang An believes that the impact of “Ida” on crude oil production capacity and refining processing volume can be seen from the impact of similar hurricanes in the past, which is a reference factor for oil price fluctuations. Data shows that “Ida” affects approximately 1.65 million barrels/day of crude oil production capacity and approximately 1.9 million barrels/day of refining capacity, which will have a significant positive boost to oil prices, but the specific increase is difficult to exceed that of “Katrina”. Moreover, crude oil prices have continued to rebound by 11% from lows in the past week, and part of the expected impact of the hurricane has been reflected in the price. Investors should always pay attention to guarding against risks when chasing the rise. </p
