On Thursday morning, Tropical Storm Eta made landfall over North Florida and has become the 12th named storm to make landfall out of a record-breaking year of 29 named storms.
Eta Making Landfall Over North Florida
An unprecedented amount of tropical systems have swirled around the Atlantic Basin this year, breaking the 2005 record of 28. The above-average tropical activity has decimated the oil and gas industry with offshore operations in the Gulf of Mexico.
2020 Hurricane Season Tracks
According to Bloomberg, some 41 million barrels were pulled offline because offshore oil and gas rigs were shuttered due to tropical activity.
"Between tropical storm Cristobal in early June and the latest Greek alphabet soup of tempests disrupting oil platforms in the Gulf, offshore drillers have had to shut about 41 million barrels of production, the most in government data going back to 2010."
Gulf of Mexico production cuts equates to about 270k barrels per day, or about the same production rate as OPEC member Republic of Congo. The reductions come when U.S. crude inventories are already swollen as crude product demand collapsed because of the virus pandemic.
Tropical Cyclones Shut A Record Amount Of Oil Output From Gulf Of Mexico
"Production fell in August mainly because hurricanes disrupted production from the Gulf of Mexico," the Energy Information Administration's Short-Term Energy Outlook stated this week. "EIA reported that U.S. crude oil production in the Gulf of Mexico averaged 1.2 million b/d in August, down 0.5 million b/d from July."
Slumping crude product demand is expected to continue as the resurgence of the virus pandemic is already resulting in new restrictions that will limit mobility in the US.
With hurricane season ending in Nov.30, this could lead to production coming back online across the Gulf of Mexico, which would further pressure crude prices.