U.S. Oil Closures After Ida Are Bullish, Vitol’s Muller Says
(Bloomberg) -- The aftermath of Hurricane Ida has left about 1.1 million barrels of daily crude production shuttered in the Gulf of Mexico and it’s unclear when that output will return, a bullish sign for oil prices, according to the world’s biggest independent trader.
Ida, which made landfall near New Orleans as a hurricane last month, battered the U.S. from the Gulf coast to the Atlantic seaboard. With oil production shut in as a precaution and OPEC+ cuts restricting output, buyers have less oil with which to meet recovering demand as economies pull out of coronavirus-induced downturns.
The shutdowns led to more than 40 million barrels of lost output in refined fuels and slightly less in foregone production from offshore fields, said Mike Muller, head of trader Vitol Group’s Asia operations. Exporters have had to rearrange trade flows around the Atlantic and the Americas to ensure supply, Muller said Sunday on a daily webinar hosted by Dubai-based consultancy Gulf Intelligence.
Oil demand in Asia “could rip” in the final months of the year as vaccination rates and economic growth there improve, he said. That’s being helped by the Chinese government granting larger crude allocations to some private refiners, he said.
Traders are pushing back their estimates of when Iranian crude will return more fully to markets in the event of a nuclear deal that leads to an easing of U.S. sanctions, Muller said. While most traders had expected to see added Iranian barrels later this year or early next year, he said market consensus is now for a return by the middle of next year.
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