Oil prices have stabilized after a sharp decline on Tuesday, as Hurricane Milton approaches Tampa, Florida, expected to make landfall late Wednesday as a Category 5 storm.
With Florida being the third-largest gasoline consumer in the US but lacking any refineries, the state relies heavily on waterborne imports.
The impending hurricane threatens to disrupt these supply chains further, impacting both fuel availability and oil prices.
As reported by the US National Hurricane Center, Hurricane Milton is anticipated to hit the Florida Gulf Coast as a major hurricane.
More than 17 million tons of petroleum and natural gas products typically move through Tampa Bay each year, according to the U.S. Energy Information Administration (EIA).
Fuel shortages in Florida
Data from GasBuddy indicates that 17.4% of petrol pumps in Florida were out of fuel as of late Tuesday.
Fuel shortages were particularly severe in the Tampa/St. Petersburg area, where 46.56% of stations ran dry, followed by 30.32% in Fort Myers/Naples and 25.29% in Gainesville.
Patrick De Haan, head of petroleum analysis at GasBuddy, noted, “In addition to the escalation in the Middle East, hurricane season remains active, with Hurricane Milton now heading toward a likely landfall in Florida.
As a result of potential evacuations, GasBuddy’s Fuel Availability tracker will remain online for areas likely to be affected by Milton.”
He emphasized that although fuel is flowing into Florida, the large number of evacuees is straining gasoline supplies at stations.
Hurricane Milton’s impact on oil production
Hurricane Helene, a Category 4 storm, previously led to a 29% shutdown of oil production in the Gulf of Mexico (GOM) in September, following Hurricane Francine, which had a more severe impact, shutting down up to 42% of crude oil production.
The EIA has since revised its estimates for GOM crude oil production downward for both September and October.
With Hurricane Milton approaching, further production disruptions are likely in the coming weeks.
Kinder Morgan, one of the largest energy infrastructure companies in the US, has closed its terminal and fuel racks in Tampa and surrounding areas.
Although the company has shut all fuel delivery terminals in Tampa, it expects trucks to continue picking up fuel from Orlando wholesale racks until winds exceed 56 kilometers per hour.
Warren Patterson, head of commodities strategy at ING Group, mentioned, “Recent reports suggest that Pemex shut oil platforms and crude-exporting terminals in the Gulf of Mexico due to the hurricane.
Some offshore oil platforms have also been closed due to the rising hurricane threat.”
Oil prices remain subdued
Brent and West Texas Intermediate (WTI) crude prices remained subdued on Wednesday, following a nearly 5% drop on Tuesday.
Despite concerns over lower US production due to Hurricane Milton, oil prices have failed to recover.
Traders are closely monitoring the situation, particularly regarding Israel’s potential military response to Iran, which recently launched ballistic missiles toward Tel Aviv.
Prices are also under pressure as the American Petroleum Institute reported a significant increase in US oil inventories, rising by 10.9 million barrels in the week leading up to Friday, contrary to analysts’ expectations of a modest 1.3 million-barrel increase.
As of this writing, Brent crude prices stand at $77.17 per barrel, while WTI is at $73.53 per barrel.
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