Crude Oil Rises 2% as Dollar Eases, Hurricane Threatens Supply

By Adedapo Adesanya

The easing of the United States Dollar and the threats of a possible disruption in the supply of crude oil in the Gulf of Mexico due to Hurricane Ian pushed prices higher on Tuesday.

The Brent crude appreciated by $2.21 or 2.6 per cent yesterday to sell at $86.27 a barrel as the West Texas Intermediate (WTI) crude grew by $1.79 or 2 per cent to trade at $78.50 per barrel.

US offshore oil producers said they were keeping an eye on Hurricane Ian’s track as the powerful storm shut-in about 11 per cent of oil production in the U.S. Gulf of Mexico as it barrelled toward Florida.

The hurricane entered the US Gulf of Mexico on Tuesday and is forecast to become a dangerous, Category 4 storm over the warm waters of the Gulf.

Some 190,000 barrels per day of oil production or 11 per cent of the Gulf’s total, were shut-in, according to the offshore regulator, the Bureau of Safety and Environmental Enforcement (BSEE). Producers lost 184 million cubic feet of natural gas or nearly 9 per cent of daily output.

Personnel were evacuated from 14 production platforms and rigs, BSEE said.

It is the first hurricane this year to disrupt oil and gas production in the US Gulf of Mexico, which produces about 15 per cent of the nation’s crude oil and 5 per cent of dry natural gas.

Also supporting prices, the US Dollar, which eased from a 20-year high, also helped support oil. A strong US Dollar makes crude more expensive for buyers using other currencies.

The oil price drop in recent months has raised speculation that the Organisation of the Petroleum Exporting Countries and allies (OPEC+) could intervene. Iraq’s oil minister on Monday said the group was monitoring prices and did not want a sharp increase or a collapse.

OPEC+ may take action to stem the price drop by cutting supply, which also lent support. The alliance meets to set policy on October 5.

Russia will likely propose at the next OPEC+ meeting that the group cut 1 million barrels per day from the group’s collective output, sources familiar with Russian thinking shared on Tuesday.