Hurricane Isaias is disrupting U.S. crude oil production in the Gulf of Mexico and could limit about 2% of the country's refining capacity, at a time when fuel markets are already tight around the world.
Isaias is churning toward Mississippi, Alabama and the Florida panhandle as a Category 3 storm with maximum sustained winds of 120 miles per hour, according to the National Hurricane Center, and is expected to make landfall Friday night or early Saturday.
As of Thursday, oil companies had shut in about 1.3 million barrels per day, or roughly 63% of total U.S. production in the Gulf, according to the Bureau of Safety and Environmental Enforcement.
The hurricane appeared to be veering away from the dense refining region in southern Louisiana near New Orleans and Baton Rouge.
But the storm could affect Chevron's refinery in Pascagoula, Mississippi, and a Vertex Energy refinery in Saraland, Alabama. Both areas are under hurricane warnings. The facilities there can produce a combined 466,000 bpd, or 2.4% of U.S. refining capacity, said Andy Lipow, president of Lipow Oil Associates.