How Has Hurricane Ida Impacted Oil, Gasoline Prices?

WTI crude oil prices dropped 1% to $68.52 per barrel on Tuesday as it appears Gulf Coast oil refineries avoided a worst-case scenario from Hurricane Ida.

Refining Shutdowns: Hundreds of offshore oil refineries were evacuated ahead of Ida’s landfall in Louisiana on Sunday. Almost all offshore Gulf oil production, or about 1.74 million barrels per day of oil and 2 million cubic feet per day of natural gas output, was suspended ahead of the storm and remained offline as of Tuesday morning.

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On Monday, Bank of America analyst Doug Leggate said power is the primary concern for many refineries in Louisiana.

“On the assumption that Western New Orleans refineries return, and Colonial remains operational, we expect the impact on refined products will be muted – and is in fact what’s played out so far in the trading session, with gasoline and diesel cracks fading the moderate premiums that emerged early,” Leggate said.

Gasoline Impact: Exxon Mobil Corporation XOM shares traded flat on Tuesday morning after the company said there was no major damage to its chemicals and refining complex in Baton Rouge.

GasBuddy analyst Patrick De Haan told the Wall Street Journal that gasoline prices could rise up to 25 cents per gallon in the event of prolonged refinery shutdowns and/or delays in the fuel supply chain. De Haan said gasoline shortages in Baton Rouge and New Orleans could take a week or two to subside due to flooding or other storm-related issues.

Benzinga’s Take: Ida was certainly a serious Category 4 hurricane that caused tremendous damage to certain parts of the Gulf Coast. Fortunately, it appears it missed major oil refining hubs in Houston and Louisiana, and operations should resume without any significant delays.