Big Oil Begins Shutting In Gulf of Mexico Production

Shell and Chevron are among the major oil companies initiating the shutdown of platforms in the Gulf of Mexico due to an impending storm that could evolve into a hurricane by the end of the week. Shell has evacuated personnel from five platforms, including Mars, Olympus, Ursa, Vito, and Appomattox, and has ceased production activities there.

Chevron, on the other hand, is shutting down four offshore platforms but leaving five others operational. Earlier reports suggested BP was also evacuating staff from offshore platforms in the Gulf. Tropical storm Isaias is anticipated to make landfall on Saturday, following its formation offshore Mexico on Wednesday and its journey to the U.S. Gulf Coast.

Meteorologists believe the storm could intensify into a hurricane by the end of the week, marking the first hurricane in a weaker-than-usual Atlantic hurricane season. U.S. National Hurricane Center director Michael Brennan warned of multiple dangerous and life-threatening impacts along the northern Gulf Coast starting Friday and extending into the weekend.

Offshore fields in the Gulf contribute to approximately 15% of U.S. total national oil production and 5% of natural gas production. A hurricane would pose a significant threat to refineries along the Gulf Coast if it makes landfall. Currently, U.S. refineries are operating at maximum capacity to produce as much fuel as possible amid a global fuel shortage, driving refining margins and retail fuel prices to record highs.

The news of platform shutdowns may also lead to higher crude oil prices in a week marked by intensified Iranian attacks on tankers in the Persian Gulf.