Producers Halt 25% of Gulf Oil Output as Isaias Heads for Gulf Coast

Since Tropical Depression Nine formed in the southwestern Gulf on Oct. 6, it has been named Tropical Storm Isaias, and the energy industry has started pulling out. As of Wednesday, producers had temporarily halted about 25% of Gulf oil output, roughly 511,000 barrels a day, according to the Marine Minerals Administration. Eight of the Gulf's 371 manned platforms had been evacuated.

Isaias had 40 mph winds on Wednesday and sat about 285 miles west of Progreso, Mexico, per the National Hurricane Center. It is expected to become a hurricane Thursday, the first of the Atlantic season. Landfall is forecast for Friday somewhere between Louisiana and the Florida Panhandle.

The oil and refining exposure

The offshore areas in the storm's path produce about 15% of U.S. crude and 5% of natural gas. Six refineries run by Shell, Valero, Marathon, PBF Energy and Chevron sit in the likely landfall zone. Gulf states hold about 50% of the nation's 18.2 million barrels a day of refining capacity.

Chevron said it is evacuating nonessential personnel from its Gulf platforms. Its Pascagoula, Mississippi, refinery can process 369,000 barrels of crude a day and makes gasoline, diesel, jet fuel and premium base oils.

Brent futures were up 93 cents, or 0.92%, at $101.51 a barrel Wednesday. West Texas Intermediate rose 82 cents to $90.25. Those prices were already elevated by the war with Iran. Treasury Secretary Scott Bessent said Tuesday that Iran has not loaded a single barrel of crude onto a vessel since Aug. 25, and a Houthi missile aimed at the Saudi city of Khamis Mushait was intercepted the same week.

Jim Burkhard, global head of crude oil market research at S&P Global Energy, said the current shut-ins are large enough to affect markets with prices this high. He added that other Gulf hurricanes have caused bigger disruptions. "I would characterize the oil market risk as moderate, but rising," he said. His larger worry is whether Isaias hits as a powerful storm near the refineries.

How strong it gets is still open

The current forecast calls for a Category 2 hurricane with 100 mph sustained winds. The Gulf is record warm for this time of year, and wind shear is low in the southern Gulf, which favors strengthening.

Closer to shore, higher wind shear could weaken the storm. The storm is also forecast to move fast, which limits its time in that hostile air. If it slowed down, CNN's forecast notes, it could fall apart quickly.

The track and intensity at approach are not locked in. Anyone from Louisiana to Florida's Big Bend is being told to watch the forecast.

Heavy rain is the near-certain threat. Downpours could start along the coast as early as Friday and spread inland through the weekend, hitting Alabama, Georgia, the Florida Panhandle, southeast Louisiana and Mississippi hardest.

This season has already shown what rain alone can do. Tropical storms Arthur and Edouard were short-lived, yet Arthur caused flash flooding in parts of Louisiana and Mississippi, and Edouard dropped more than 20 inches on eastern Texas.

Emergency declarations and cancellations

Alabama Gov. Kay Ivey declared a state of emergency for 40 counties. "While I hope for minimal impacts, we must take preparations seriously," she said on X.

Florida Gov. Ron DeSantis declared one for 25 Panhandle and Big Bend counties. That activates the state's hurricane emergency plan, and the state is preparing to send a Miami-based urban search and rescue task force.

In Gulf Shores, Alabama, organizers canceled the National Shrimp Festival, which had been set for Thursday through the weekend and drew an estimated 325,000 people last year. Gulf Shores and Orange Beach encouraged people in low-lying areas to evacuate voluntarily.

In Pensacola, utilities were prepositioning repair crews and the city handed out sand for sandbags. Mayor D.C. Reeves urged residents to check on elderly neighbors. "Obviously no need to panic at this point," he said.

This stretch of coast has a long record. Hurricane Camille killed more than 250 people near Waveland, Mississippi, in 1969. Katrina killed nearly 1,400 in 2005, and Michael leveled homes near Panama City, Florida, in 2018.

A quiet season until now

September ended without a hurricane for the first time in 32 years, as strong wind shear tied to El Niño suppressed development. The calm ended up arriving in the Gulf, at the worst time for a market already stretched by war.

The next checkpoints are concrete. The hurricane center's Thursday advisories will show whether Isaias reaches hurricane strength as forecast. Operators will also decide whether to widen the shut-ins beyond the current 511,000 barrels a day and whether the six refineries in the landfall zone cut runs before Friday.