Almost all global markets seem to be transfixed on Hurricane Irma, which could wallop Florida with an unprecedented and merciless blow and have an impact on many lives as well in the U.S. and global economy. Fox News reported that France’s interior minister on Thursday said the Category 5 storm killed at least eight and injured 23 on St. Martin. Irma blacked out much of Puerto Rico and is headed toward Haiti and the Dominican Republic.
The storm will go over the Caribbean refining corridor perhaps disabling Caribbean refiners just as U.S. refiners are starting to get back up in the aftermath of Hurricane Harvey. There are worries that massive storage terminals could be destroyed by the storm. Tropical storm Katia has the potential to impact Mexican oil production and could add to Mexican oil shortages that are getting worse. Mexican state-run oil company Pemex said on Wednesday that its facilities were not in danger so far, but it was monitoring Katia's path to decide if further action is needed.There is about 3.8 million barrels of daily refining capacity, or about 20%, was shut in, although a number of the refineries, as well as petroleum handling ports, were in the process of restarting as reported by Reuters.
Shortages of product in Mexico and other parts of Latin America are only going to get worse as oil terminals have been shut and many places can’t get product because of Hurricane Harvey. Reuters reported that Hurricane Irma has shut down oil terminals across the northern Caribbean, worsening a fuel supply crunch in Latin American countries that have struggled to meet demand since Hurricane Harvey disrupted shipments from the U.S. Gulf Coast last month. Latin America had already been scrambling for almost two weeks to find cargoes because of Harvey, which caused massive flooding in Texas and Louisiana, shutting down oil ports, refineries and production platforms. Irma, which is being followed by two other hurricanes in the Atlantic, is threatening Caribbean refineries, terminals and storage facilities.
There is more than 100 million barrels of storage capacity in the Caribbean, which is crucial for those nations because of limited ability to refine crude, and also supply for South American nations including Brazil, Venezuela and Colombia. Several oil trading firms had moved a portion of their U.S. fuel inventories to the Caribbean ahead of Harvey so they could keep selling cargoes to Latin America, traders from two companies told Reuters. Those barrels are now locked in terminals in St. Eustatius, Puerto Rico and the U.S. Virgin Islands, as Irma, a Category 5 storm with winds of 185 mph (295 kph), is expected to hammer the region for several more days before turning north.