Gulf of Mexico storm pushes oil price to $66

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Crude oil prices jumped three per cent to $66.08 a barrel yesterday, after major producers evacuated rigs in the Gulf of Mexico ahead of an expected storm and just as United States’ crude inventories shrank more than expected.

While the global benchmark, Brent crude rose by $1.92, to $66.08 a barrel, the United States West Texas Intermediate (WTI) climbed by $1.75, also three per cent, to $59.58 a barrel.

US crude stocks fell 9.5 million barrels in the week to July 5, more than triple the 3.1 million barrel draw analysts had expected, as refineries ramped up output, the country’s Energy Information Administration (EIA), said.

The report followed data from the American Petroleum Institute (API), an industry group, on Tuesday that had boosted oil prices earlier.

Reuters reported that major oil firms began evacuating and halting production in the Gulf of Mexico after weather forecasts warned that a tropical disturbance might become a storm yesterday (Wednesday) or today.

Chevron Corporation, Royal Dutch Shell, BP and BHP Group were in the process of removing staff from 15 offshore platforms.

ExxonMobil said it was “closely monitoring” the disturbance to determine if its facilities might be affected.

The Gulf of Mexico is home to 17 per cent of United States crude oil output, which stands at around 12 million barrels per day (bpd).

The US crude and global benchmarks have gained this year as the Organisation of the Petroleum Exporting Countries (OPEC) and big producers such as Russia have curbed output to bolster prices.

OPEC and its allies, led by Russia, have been reducing oil output since 2017 to prevent prices from sliding amid soaring production from the United States, which this year has become the world’s top producer ahead of Russia and Saudi Arabia.

The alliance, known as OPEC+, agreed last week to extend their supply-cutting deal until March 2020.

Also tensions around Iran’s nuclear programme and recent incidents involving oil tankers in the Gulf have supported prices.

A US General said Washington hoped to enlist allies over the next two weeks in a military coalition to safeguard strategic waters off Iran and Yemen, where the United States blames Iran and Iran-aligned fighters for attacks.

Iran has long threatened to close the Strait of Hormuz, through which almost a fifth of the world’s oil passes, if it was unable to export its oil due to US sanctions.

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