Hurricane Ida approached landfall on Sunday as a Category 4 storm near Port Fourchon, Louisiana, hitting critical U.S. oil infrastructure with blows upward to 150 miles per hour (240 km per hour).
The Louisiana Offshore Oil Port (LOOP), the most prominent privately-owned crude terminal in the United States, delayed deliveries ahead of the storm after estimates indicated possible influences to its operational areas.
LOOP’s marine terminal is set in open waters around 18 nautical miles (29 km) apart from the shores of Louisiana, while Port Fourchon is its flat base.
The Louisiana port is the exclusive U.S. deepwater terminal fitted with offloading supertankers. It handles about 10% to 15% of its domestic oil and 10% to 15% of its foreign oil imports. The Port Fourchon website states that it is also related to nearly half of the U.S. refining capacity. It holds 90% concerning the Gulf of Mexico’s deepwater oil product.
As stated by the offshore regulator, as of Sunday, higher than 95% of U.S. Gulf of Mexico oil production was delayed, representing approximately 1.74 million barrels per production day. The Gulf supplies around 17% of the nation’s oil.
Hurricane Ida intensified quicker than executives prognosticated, necessitating evacuations along the Gulf Coast and business closings. On Saturday, Louisiana Governor John Bel Edwards proposed that it could be the state’s most direct severe hit following the 1850s.
Different ports in south Louisiana, together with the Port of New Orleans and Houma, were closed on Sunday. In Mississippi, Biloxi, Gulfport and Pascagoula, and the Gulf Intercoastal Waterway were completed.
LOOP was established in 1972 and grew into a limited liability company in 1996 as a joint venture among Marathon Pipe Line, Shell (LON: RDSa) Oil Company, and a unit of Valero Energy (NYSE: VLO).
COVID-19 imposes a threat on Oil Market
Nevertheless, the Covid-19 threat to global demand rejects to go away. The European Union will probably reimpose a prohibition on non-essential travel from the U.S. due to the surge in infections over the latter.
Demand for fuel is, in any event, expected to decline over the next several weeks in line with typical seasonal patterns as the summer tourism season winds down.
Financial market members have beforehand pared their chances on crude in recent weeks as the Delta variant of coronavirus started to make its presence felt. In the week ended Tuesday, they chopped their net long positions in U.S. crude futures to their weakest level after 2019, as stated in data published on Friday by the Commodity Futures Trading Commission.