Daily Telegraph: Oil surges as Rita puts gulf under threat: “Shell was evacuating 550 non-essential workers. Shell's Mars platform, which cost $1billion (£550m) to develop, may not return to production until well into next year. In the two weeks since Katrina, Shell has only managed to bring back a third of its 450,000 barrels a day of oil.”: Tuesday 20 Sept 2005
By Malcolm Moore in New York (Filed: 20/09/2005)
Oil prices surged more than $3 a barrel yesterday as fears grew that Rita, a tropical storm brewing in the Bahamas, will blow through the Gulf of Mexico this week and cause havoc for the oil industry struggling to rebuild the damage caused by Hurricane Katrina.
The United States National Hurricane Centre warned yesterday that Rita is likely to strengthen into a hurricane today and is heading straight for the oil platforms in the gulf. The news sent the price of Brent crude up $3.11 cents a barrel to $64.21, while the price of oil in New York also rose by more than $3 a barrel, to $66.40.
Paul Horsnell, head of oil trading at Barclays Capital, said: "We know these hurricane models are sometimes erratic but at the moment it seems to be headed plum centre."
He added that the market had underestimated the risk of further hurricanes by marking down the oil price so sharply after Katrina. "We knew that other storms were coming through," he said. "To go back to such low prices was a bit too far and left the system heavily exposed to the slightest bit of bad news." Another tropical storm, Philippe, is also gathering strength in the Caribbean.
Katrina shut down over 90pc of the oil production from the gulf, flooded several refineries, triggered panic buying at US petrol stations and sent the price of unleaded in the UK above £1 a litre. Since the storm subsided, the oil companies have managed to bring back 40pc of their production and all but four refineries are back on line.
However, the threat of Rita has prompted both Shell and Chevron to start pulling staff out of the region. Shell was evacuating 550 non-essential workers.
Shell's Mars platform, which cost $1billion (£550m) to develop, may not return to production until well into next year. In the two weeks since Katrina, Shell has only managed to bring back a third of its 450,000 barrels a day of oil.
The threat from Rita was particularly bad news for Norsk Hydro, the Norwegian company that yesterday announced it was buying Spinnaker Exploration, all of whose assets are in the gulf, in a $2.45billion deal.
The price of petrol also spiked yesterday by more than 10pc to $1.97 a gallon in the US, prompting consumer groups to complain of profiteering by the oil majors.
The Foundation for Taxpayer and Consumer Rights said the price has doubled in California between January and August because oil companies exported their refined fuels out of the country.
Meanwhile, ministers at the Opec meeting in Vienna will decide on whether to increase the supply of crude today. The oil cartel has repeatedly insisted that the market is well supplied and the Libyan energy minister said: "The problem is a shortage of refining capacity."
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