Tags: Hurricane Harvey | hurricane | impact | oil | prices | crude | gasoline

Harvey's Short-Term Impact May Be Higher Oil Prices

Harvey's Short-Term Impact May Be Higher Oil Prices
(Dollar Photo Club)

By    |   Wednesday, 06 September 2017 10:30 AM

Harvey hit hard the heart of the US oil industry.

So far, it has shut down 11.2 percent of US refining capacity (about one-third of all US refining capacity is in Texas’ Gulf Coast) and roughly 25 percent of US oil production from the Gulf of Mexico (accounting for about 20 percent of US crude production). It has also closed all ports along the Texas coast.

Based on current refinery operations, anywhere from 1 million to 2.2 million barrels per day (bpd) of refining capacity are offline, as well as just under half a million bpd of production. The US has been producing around 9.5 million barrels per day. This production has played a major role in keeping global oil prices low.

This in turn hurt oil-dependent countries like Russia and Saudi Arabia.

Harvey’s Impact on US Oil Production Will Be Temporary, Even If It Is Severe.

In the short term, Harvey’s impact could be globally significant. Harvey has passed, but new storms in the Gulf of Mexico and Atlantic Ocean are threatening to dump more rain on the Gulf Coast.

If there is damage to the Colonial Pipeline—which transports more than 40 percent of the Texas Gulf Coast’s refined product, according to the EIA—US consumers would not only have to pay more at the pump, but US policymakers would have to deal with Russia, which would greatly benefit from even a momentary spike in prices.

It won’t be clear what will happen to oil prices until we know what kind of damage coastal facilities have sustained, but the possibility of higher prices can’t be ruled out.

Grab George Friedman's Exclusive eBook, The World Explained in Maps

The World Explained in Maps reveals the panorama of geopolitical landscapes influencing today's governments and global financial systems. Don't miss this chance to prepare for the year ahead with the straight facts about every major country’s and region's current geopolitical climate. You won't find political rhetoric or media hype here. The World Explained in Maps is an essential guide for every investor as 2017 takes shape. Get your copy now—free!

© 2018 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Markets
It won’t be clear what will happen to oil prices until we know what kind of damage coastal facilities have sustained, but the possibility of higher prices can’t be ruled out.
hurricane, impact, oil, prices, crude, gasoline
348
2017-30-06
Wednesday, 06 September 2017 10:30 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved