Crude oil prices started the week with a dip earlier today but are likely to reverse course on the news that storm Beryl has strengthened to a hurricane again as it approaches Texas, where it is expected to make landfall.
The largest ports in the Lone Star State already shut down over the weekend in anticipation of the hurricane, which means a temporary suspension of oil exports and refinery loadings. The ports shut down include Corpus Christi—a major oil industry hub—Houston and Galveston, and Freeport and Texas City, which are also oil hubs.
Shell and Chevron were among Gulf oil operators that began evacuating staff from offshore platforms ahead of Beryl’s approach after the storm wreaked havoc in the Caribbean. Beryl is expected to bring strong winds and floods to the Texas coast as it makes landfall.
Earlier this year, the Energy Information Administration predicted up to 25 named storms this hurricane season, noting that “The potential for a stronger hurricane season suggests heightened risk for weather-related production outages in the U.S. oil and natural gas industry.”
Last year, Atlantic hurricane season saw one out of 20 named storms hit land in the U.S.—none causing any severe disruption or damage to oil and gas industry installations.
This year, things may be different during the season, which starts on June 1st and runs until the end of November, with hurricanes most commonly hitting the Southeast and the U.S. Gulf Coast.
Even if the season turns out weaker than predicted, which is always a possibility, especially after last year, the impact of storms on oil prices remains inevitable. The difference is in the degree of this impact, which depends on the severity of the storm and the potential damage it does to oil and gas infrastructure. The impact would be reinforced by any inventory draws reported by the EIA amid peak driving season.