Oil price relief as Hurricane Gustav misses main Gulf of Mexico platforms

Oil prices looked to have peaked at around $118 a barrel yesterday as producers in the Gulf of Mexico shut down operations in fear of Hurricane Gustav.

Firms, including Royal Dutch Shell, abandoned the region last week and closed down pipelines.

Waves from Hurricane Gustav crash on Beach Boulevard in Waveland, Mississipp

Panic over: Gustav has caused less disruption to oil supplies than did Katrina

But last night forecasters said the hurricane wasn't gaining strength as it approached the US coastline, dispelling fears of severe damage - as happened to the Thunder Horse oil and natural gas platform, pictured right, when Hurricane Dennis hit the Gulf of Mexico in 2005.

The hope is that production in the Gulf, which produces a quarter of the US's crude oil, could be back up within a week.

Simon Wardell, oil analyst at Global Insight, said: 'A lot of the rises we have seen were already priced in last week in anticipation of a disruption to production. Oil prices are already coming back down again.'

Damage assessment will take place once the hurricane passes and production is expected to resume two to five days after.

UK traded Brent crude closed at $107.42 a barrel, down $4.56, while US traded oil was down $4.16 at $111.3. Overnight in Asia the price briefly surged above $118.


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