Hurricane Matthew is wreaking havoc through the Bahamas and the U.S. southeastern coast.
Beyond the tragic loss of life and property, economists are also predicting major business disruptions related to the hurricane, particularly in oil and gas production and delivery.
"Massive evacuations are expected to expand along the East Coast as Hurricane Matthew, a major threat to life and infrastructure, barrels down," states Phil Flynn, a market analyst for Futures Magazine in an October 4 update. "For energy, the track of the storm looks to be a bigger threat to demand than supply, but in the near term it will further reduce U.S. oil supply that has fallen at a historic pace during the last five years weeks,"
"Oil tankers are being diverted to other ports or will wait out the storm and that could delay imports by as little as four days, or in some cases, it could be weeks," he added. "Gulf cargoes may end up in New York harbor but as the storm moves north, supply into New York Harbor will be challenged as well."
Those disruptions are boosting crude oil futures, which crested $50 for both November and December Globex Futures, the strongest levels since late June 2016. January 2017 futures are trading at $51, as well. Additionally, Brent crude oil is trading at $52 per barrel, the highest levels since August 2016.
Oil analysts estimate that 10 million barrels of refined oil will be directly impacted by Hurricane Matthew, with regional storage facilities at a high risk of significant damage, according to Tank Tiger, a Princeton, N.J.-based oil services consulting firm. Some storage facilities have already been evacuated, including Vitol's Cape Canaveral, Fla.-based Seaport Canaveral Florida storage terminal. That closing alone impacts three million barrels of oil and will contribute to already rising gasoline prices in Florida, Georgia, and South Carolina, analysts say.