Hurricane Katrina pushed oil prices to new records this week as news filtered through to panicking oil traders in London and New York of widespread damage to oil rigs in the Gulf of Mexico caused by what looks set to be the costliest hurricane since Andrew in 1992.
“Fasten your seat belt — peak hurricane season isn’t until mid-September and we’ve had two hit the Gulf coast already,” said Deborah White at SG Commodities in Paris.
Brent crude this week jumped to fresh highs of more than $70,85 a barrel.
Gas prices and wholesale petrol prices hit records too as rigs and refineries across the Gulf of Mexico were shut as Hurricane Katrina wreaked havoc. That hit about 1,4-million barrels a day of oil production, not far off Britain’s entire daily output.
On Tuesday, Saudi Arabia, the world’s biggest exporter, which produces nearly 10-million barrels of crude a day (bpd), said it would if necessary pump another 1,5-million bpd. The US said it would draw oil from its strategic reserves to help refiners hit by Hurricane Katriina.
The organisation of Petroleum Exporting Countries said it would consider adding 500 000bpd to its current production level of 28,5-million bpd when it meets next month.
But Ray Holloway of the Petrol Retailers’ Association warned people against getting too carried away. He said deliveries of gasoline and diesel from refineries in southern Louisiana would be delayed for a while but would resume at a time when gasoline demand in the US is falling as people return to work after the holidays. “I don’t see this as a lasting problem, more of a hiccup. There is plenty of crude oil there. This is a knee-jerk reaction.”
Economists are becoming increasingly concerned that sky-high oil prices will damage the global economy, although there has been little sign of that yet. Inflation remains subdued around the world and growth in most regions remains fairly robust, especially in the US — for now at least. — Â